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U.S. consumer confidence increases as expectations soar
at start of new year, according to RBC CASH Index
NEW YORK, January 12, 2007 — At the start of
the new year, Americans are feeling much more optimistic about
their economic future than they were at the close of 2006,
according to the most recent results of the RBC CASH (Consumer
Attitudes and Spending by Household) Index, which measured
the attitudes of 1,002 Americans this week. Overall consumer
sentiment increased more than eight points this month, driven
by a 29 point jump in assessments of future conditions. Opinions
regarding current conditions dipped slightly, feelings about
job security held steady and confidence in investing rose
slightly. As a result, the RBC CASH Index for January released
today by RBC Financial Group, stands at 95.3, compared to
86.9 in December and 78.2 one year ago.
"The significant increase in the expectations subcomponent
of the CASH Index, which reached 83.8, the highest since October
2004, drove the rise in the overall Index. This increase is
likely derived in substantial part from the takeover of the
new Congress," said T.J. Marta, Economic and Fixed Income
Strategist for RBC Capital Markets. "However, the rise
in the CASH Index also likely stems from the continued tight
labor conditions, evidenced by the current low unemployment
rate of 4.5 per cent, and the fact that the jobs subcomponent
remains near its high since the Index began in 2002."
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-indices:
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 1,002 U.S. adults polled from January
8 - 10, 2007, 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' economic outlook has skyrocketed during the
past month, as seen in the RBC Expectations Index,
which stood at 83.8 in January, a dramatic increase from
December's 55.0. This month's index score represents the
strongest level of optimism for future conditions in more
than two years (in October 2004, the Expectations Index
stood at 95.3). The primary factor driving consumers' renewed
optimism for future conditions is the perception that the
economy as a whole will be stronger six months from now.
Currently, one-third (31 per cent) of Americans believe
their local economy will be stronger six months from now,
up from 24 per cent in December. The strong gain in expectations
among consumers was largely responsible for the 8-point
increase in the overall RBC CASH Index.
- While expectations for the economy as a whole improved,
expectations for personal finances remained unchanged from
December. Again this month, four in ten (40 per cent) Americans
said they believe their personal finances will be stronger
six months from now.
- Consumers' evaluations of the current local conditions
softened slightly during the past month, producing a one-point
drop in the RBC Current Conditions Index,
bringing it to 94.3 in January. Currently, one in five Americans
(21 per cent) rate their local economy as strong (down from
26 per cent in December). While evaluations of the current
economy as 'strong' decreased, the January results do not
represent an increase in the number of 'weak' evaluations.
Rather, consumers are more ambivalent, with a majority (55
per cent) rating the local economy as a 4 or 5 (on a 1-7
scale, with '7' representing a 'very strong economy').
- Americans' attitudes toward investing held steady this
month, with the individual indicators comprising the investment
index remaining statistically unchanged. The RBC Investment
Index for January stands at 83.2, a nearly one-point
increase from the 82.5 level in December. Currently, 32
per cent of consumers report they are more comfortable making
a major purchase like a home or car, compared to 31 per
cent last month. Confidence in their ability to invest in
the future also remained statistically unchanged, with 43
per cent of consumers reporting greater confidence, compared
to 41 per cent in December.
- Consumer sentiment regarding near-term investments also
held steady in January, with four in ten (38 per cent) Americans
reporting they believe the next 30 days will be a good time
to invest in real estate, compared to 36 per cent in December.
More than four in ten (44 per cent ) Americans believe the
next 30 days will be a good time to invest in the stock
market, a slight increase from the 41 per cent level in
December.
- Confidence in job security remained stable. The RBC
Jobs Index for January stands at 126.3, compared
to 126.5 in December. All three indicators of job security
held steady this month - four in ten (43 per cent ) consumers
report they are more confident about current job security
than six months ago (compared to 44 per cent in December
2006). Personal job loss experience remained unchanged,
with one-third (32 per cent) reporting that they or someone
they know personally have lost their job as the result of
economic conditions (compared to 31 per cent last month).
Additionally, expectations regarding future job loss remained
low this month, with fewer than one in five (16 per cent)
reporting that future job loss is likely (unchanged from
December).
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
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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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