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U.S. consumer confidence holds steady amid oil price increases
and Middle East unrest, according to RBC CASH Index
NEW YORK, July 14, 2006 — Although Americans'
attitudes about the future direction of the economy continues
to fluctuate slightly, consumer confidence is holding steady
in July, according to the most recent results of the RBC CASH
(Consumer Attitudes and Spending by Household) Index, which
measured the attitudes of 1,000 Americans earlier this week.
A softening of confidence rather than an increase in negativity,
which was seen across all measures of the Index, produced
a slight dip in overall consumer sentiment. As a result, the
RBC CASH Index for July, released today by RBC Financial Group,
stands at 80.1, compared to 84.1 in June.
"Despite mortgage rates rising to a four-year high —
approaching 6.75 per cent for a 30-year fixed-rate loan —
the price of oil testing a record high above $75 per barrel
and the national average of mid-grade gasoline remaining above
$3.00 per gallon in recent weeks, consumers appear to be wavering
only slightly in their outlook," said T.J. Marta, Economic
and Senior Currency Strategist for RBC Capital Markets. "The
modest drop in the overall index reflects the fact that the
Fed's 2.25 per cent hike in interest rates since June 2005
is only now beginning to impact economic growth. The RBC CASH
Index supports our view that consumers will moderate their
spending in coming months."
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 composed 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 1,000 adults polled from July 10-12,
2006 by survey-based research company Ipsos Public Affairs.
The margin of error was plus or minus 3.1 per cent. Highlights
of the survey results include:
- Consumers' confidence in future conditions cooled somewhat
this month bringing the RBC Expectations Index
to 34.2, down from 40.4 in June. Expectations regarding
personal financial situations held steady as 37 per cent
of Americans said they expected improvements in personal
financial strength, compared to 38 per cent with similar
expectations in June. And while the number of Americans
who believe they or someone they know will be at risk of
losing their job due to economic conditions in the next
six months decreased to 15 per cent, compared to 16 per
cent last month, the proportion of Americans who feel this
possible job loss is "not likely" also declined
slightly in July 2006 (54 per cent not likely in July, compared
to 57 per cent not likely in June).
- However, the RBC Current Conditions Index,
at 96.6, held steady when compared to the 99.4 registered
last month. Consumers do not show signs that their opinions
are becoming any more negative about current conditions;
rather, their attitudes are slightly less strongly positive
than before. Americans are also slightly less confident
in their ability to make household purchases (38 per cent
more confident in July, compared to 40 per cent more confident
in June) and their ability to invest in the future (40 per
cent more confident, compared to 44 per cent more confident
in June 2006).
- Although confidence in the ability to invest in the future
dropped somewhat, Americans' attitudes toward major purchases
improved slightly (35 per cent more confident in July 2006,
compared to 32 per cent more confident in June 2006). The
result was a marginal increase in the RBC Investment
Index for July 2006, which stands at 89.6, compared
to 88.4 in June.
- Job security dipped slightly this month. The RBC
Jobs Index stands at 116.9 in July, down from 124.1
in June. This month only 36 per cent of Americans reported
they are more confident about their job security than six
months ago (compared to 43 per cent more confident in June
2006). Those feeling less confident include individuals
who feel the country is off on the wrong track (57 per cent
less confident); women age 45 or older (53 per cent less
confident) and, Americans with an annual household income
of less than $25, 000 (54 per cent less confident).
The entire RBC CASH Index report can be viewed at www.rbc.com/newsroom/rbc-cash-index.html
About RBC Financial Group
Royal Bank of Canada (TSX, NYSE: RY) uses the initials RBC
as a prefix for its businesses and operating subsidiaries,
which operate under the master brand name of RBC Financial
Group. Royal Bank of Canada is Canada's largest bank as measured
by market capitalization and assets and is one of North America's
leading diversified financial services companies. In the United
States, RBC provides personal and commercial banking, insurance,
full-service brokerage and corporate and investment banking
services to about 1.5 million clients through RBC Centura,
RBC Insurance, RBC Liberty Insurance, RBC Dain Rauscher and
RBC Capital Markets. The company employs approximately 70,000
full and part-time employees who serve more than 14 million
personal, business and public sector clients through offices
in North America and some 30 countries around the world. For
more information, please visit www.rbc.com.
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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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