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U.S. consumer confidence brightens considerably, according
to RBC CASH Index
NEW YORK, June 9, 2006 — Despite a declining
stock market and fears surrounding rising interest rates,
consumer confidence levels improved substantially in June
after dropping dramatically in May, according to the most
recent results of the RBC CASH (Consumer Attitudes and Spending
by Household) Index, which measured the attitudes of 1,003
Americans earlier this week. Consumer sentiment brightened
considerably across all surveyed areas, with the biggest increases
occurring in the areas of economic expectation and job security.
As a result, the RBC CASH Index for June, released today by
RBC Financial Group, stands at 84.1, compared to 67.1 in May.
"The impressive upswing in US confidence during June
is somewhat surprising given the backdrop of perceived inflation
threats and rising interest rates," said T.J. Marta,
Economic and Senior Currency Strategist for RBC Capital Markets.
"However, the rise is consistent with our forecast and
Fed rhetoric that growth is merely moderating to a more sustainable
pace, with downward pressures on the consumer from higher
mortgage rates and gas prices being offset somewhat by rising
income and a relatively strong labor market."
The RBC CASH Index is a monthly national survey of consumer
attitudes on the current and future state of local economies,
personal finance situations, savings and confidence to make
large investments. The Index is comprised of four sub-indexes;
RBC Current Conditions Index; RBC Expectations Index; RBC
Investment Index; and, RBC Jobs Index. The Index is benchmarked
to a baseline of 100 assigned at its introduction in January
2002. This month's findings are based on a representative
nationwide sample of 1,003 adults polled from June 5-7, 2006
by survey-based research company Ipsos Public Affairs. Highlights
of the survey results include:
- Consumers' economic outlook recovered more than two-thirds
of the 50-point decline observed in last month's RBC
Expectations Index, which now stands at 40.4, a
34 point increased from the 6.3 level in May. Only one in
five (20 per cent) Americans believe their local economy
will be weaker in the near future, down from 24 per cent
last month. Those age 18-29, as well as minorities and urban
residents, all reported being more optimistic about the
future than they did last month.
- Consumer anxiety over job security reflected in the May
2006 survey has eased and the RBC Jobs Index
for June 2006 stands at 124.1, a nearly 14 point gain that
returns consumer job sentiment close to its 12-month peak
of 124.5 in April 2006. A full 71 per cent of those age
18-29, 66 per cent of residents of the West and 64 per cent
of those with household income in excess of $75K said it
is "not likely" they will experience direct job
loss in the next six months.
- The RBC Investments Index stands at 88.4
per cent, reversing a three-month decline, but still down
from the February high of 101.5. Consumers' attitudes toward
spending increased slightly, but is still down from a 16-month
high reached in February 2006. With continuing interest
rate hikes likely, Americans are more cautious regarding
major purchases with only one third (32 per cent) reporting
they are more comfortable in making a major purchase like
a home.
- The RBC Current Conditions Index for June
stands at 99.4, up from 90.3 last month, reversing a three-straight-month
decline in respondent’s perceptions about the strength
of their local economies. The upturn in the index is due
largely to improved opinions regarding consumers’ personal
spending and savings – respondents are more confident
in their ability to make household purchases (40 per cent
more confident in June 2006, compared to 35 per cent more
confident in May 2006) and their ability to invest in the
future (44 per cent more confident, up from 39 per cent
more confident in May 2006).
The entire RBC CASH Index report can be viewed at www.rbc.com/newsroom/rbc-cash-index.html.
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Contacts:
Kevin Foster, RBC Capital Markets, (212) 428-6902
Loretta Healy, The Hubbell Group, Inc. (781) 878-8882
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