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U.S. consumer confidence increases sharply, according to
RBC CASH Index
Consumer sentiment soars to seven-month high
NEW YORK, September 15, 2006 — September's falling
temperatures and declining gas prices have put consumers in
a decidedly more optimistic mood, according to the most recent
results of the RBC CASH (Consumer Attitudes and Spending by
Household) Index, which measured the attitudes of 1,001 Americans
this week. Consumer sentiment surged nearly 19 points, as
economic attitudes brightened across the board, with the exception
of job security, which held steady. As a result, the RBC CASH
Index, released today by RBC Financial Group, jumped to 93.7,
compared to 74.8 in August.
"The RBC CASH Index has rebounded to its highest level
since February, which itself constituted a high since December
2004. The sharp rise was driven by the current conditions
index, which reached 118.8, its highest level since data collection
began in 2002," said T.J. Marta, Economic and Fixed Income
Strategist for RBC Capital Markets. "The rise likely
reflects declines in both gasoline prices and mortgage rates.
Overall, the report suggests that the U.S. consumer remains
buoyant, with a cautious stance about the future."
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 1,001 U.S. adults polled from September
11-13, 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:
- The RBC Current Conditions Index increased
nearly 27 points, reaching 118.8 in September, compared
to 92.1 last month. More than one quarter (27 per cent)
of Americans rate their local economy as strong (compared
to 21 per cent in August) and one third (33 per cent) rate
their personal financial situation as strong (compared to
26 per cent last month). Not only are more Americans feeling
confident about their personal financial situation, fewer
are feeling pessimistic. Only one in five (20 per cent)
rate their current financial situation as weak (compared
to 26 per cent in August 2006).
- Americans' enthusiasm regarding current conditions is
mirrored in more positive views regarding expectations about
the future. The RBC Expectations Index, which
stood at 21.8 in August, increased to 39.4 this month. While
only one in five respondents believe (21 per cent) their
local economy will be stronger six months from now (holding
steady compared to 19 per cent last month), the percentage
of Americans believing their local economy will be weaker
six months from now dropped four points, to 17 per cent
from 21 per cent in August.
- Consumers' views of the investment climate also showed
improvement. The RBC Investment Index increased
nearly 27 points this month, reaching 110, compared to 83.2
in August. Americans' confidence in their ability to invest
in the future held steady in September, with 42 per cent
reporting they are more confident in their ability to invest
in the future, compared to 41 per cent last month. Attitudes
toward purchases also improved. Consumers exhibited substantially
greater comfort with both major purchases like a home or
car (36 per cent more comfortable in September, compared
to 28 per cent more comfortable in August) and other household
purchases (42 per cent more comfortable in September, compared
to 34 per cent more comfortable in last month).
- While Americans report being more comfortable in making
purchases now as compared to six months ago, a majority
of consumers still believe the next 30 days will be a bad
time to make an investment in either the stock market or
in real estate. Only one third (35 per cent) of respondents
believe the next month will be a good time to invest in
real estate, and, while attitudes regarding stock market
investments have improved (40 per cent said it would be
a good time in September, compared to 34 per cent in August),
the majority of Americans said they believe the next month
will be a bad time to invest in the stock market.
Consumer confidence regarding job security held steady in
September, dipping only one point. The RBC Jobs Index
for September stands at 119.4, compared to 120.5 in August.
Direct job loss experience basically held steady in September,
with 33 per cent of consumers reporting that they or someone
they know personally has lost their job as a result of economic
conditions in the past six months (compared to 30 per cent
last month). Looking forward, however, those believing that
direct job loss experience is likely in the
next six months increased to 19 per cent (compared to 15 per
cent in August).
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 (RY on TSX and NYSE) 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:
Loretta Healy, The Hubbell Group, Inc. (781) 878-8882
Kevin Foster, RBC Capital Markets, (212) 428-6902
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