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U.S. consumer confidence heating up, despite winter’s
grip on nation according to RBC Cash Index
NEW YORK, February 9, 2007 — Consumer sentiment
continued to heat up this month despite the deep freeze gripping
much of the country, 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. Overall consumer confidence rose by nearly 8 points
in February, as Americans' assessments of current conditions,
investing and job security increased substantially. Although
opinions regarding future conditions dipped significantly,
overall optimism in all other areas surveyed outweighed increasing
pessimism for the future. As a result, the RBC CASH Index
for February released today by RBC Financial Group, stands
at 103.0, compared to 95.3 in January and 96.1 one year ago.
"The chill in the air has not dampened Americans' enthusiasm
for current economic conditions," said T.J. Marta, Economic
and Fixed Income Strategist for RBC Capital Markets. "Consumers
appear to be buoyed by the strong jobs market, gasoline prices
that have reached a 14-month low and equity holdings that
have reached a high since the dot.com era."
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 1,000 U.S. adults polled from February
5-7, 2007, by survey-based research company Ipsos Public Affairs.
The margin of error was ± 3.1 per cent. Highlights
of the survey results include:
- Americans' attitudes about current conditions soared this
month, increasing nearly 20 points and bringing the RBC
Current Conditions Index to 114.0, compared to 94.3
in January. Consumers reported renewed optimism in their
current local economy and personal financial situations.
Currently one-quarter (25 per cent) of consumers rate their
local economy as strong (compared to 21 per cent last month),
and three in ten (29 per cent) rate current personal finances
as strong (compared to 25 per cent in January). The strong
gains in current conditions among consumers contributed
significantly to the increase in the overall RBC CASH
Index, and helped offset the decline in perceptions
of future conditions.
- The RBC Expectations Index for February
stands at 69.2, dropping more than 14 points from its January
level of 83.8. The downturn in the index is due largely
to a drop in expectations for the economy as a whole and
for personal finances. This month, fewer than one in four
American consumers (22 per cent) believe their local economy
will be stronger six months from now (compared to 31 per
cent in January), and just over one-third (36 per cent)
believe their personal financial situation will be stronger
six months from now (compared to 40 per cent last month).
- Although the number of consumers who indicated that future
conditions would be "stronger" did decrease, this
month's results do not show an increase in the number of
Americans expecting "weaker" conditions in the
future. Rather, consumers are more ambivalent about their
future, with nearly two-thirds (65 per cent) believing their
local economic conditions will remain unchanged six months
from now and a majority (55 per cent) believing their personal
finances will be unchanged six months from now.
- This month, the RBC Investment Index shot
up nearly 20 points as significantly fewer consumers reported
being less comfortable in making major and other household
purchases, and fewer reported decreased confidence in their
ability to save for the future. The RBC Investment
Index for February stands at 102.4, compared to
83.2 observed last month. The percentage of Americans reporting
they are less comfortable making household purchases dropped
to 38 per cent (compared to 43 per cent in January). Similarly,
consumers who said they are less comfortable regarding the
ability to save for the future declined to 38 per cent (compared
to 42 per cent last month). Confidence in their ability
to invest in the future remained unchanged from January,
with 43 per cent of consumers reporting greater confidence
again this month.
- Other indicators of investing confidence also held steady
in February, with nearly half (46 per cent) of Americans
reporting they believe the next 30 days will be a good time
to invest in the stock market (compared to 44 per cent last
month). While opinions regarding stock investments did not
change significantly, February 2007 represents the first
time since April 2006 that the percentage of consumers reporting
it will be a good time to invest in stock outnumbered those
who report it will not.
- Consumer confidence in job security reached an all time
high this month, bringing the RBC Jobs Index
for February to 131.9, compared to 126.3 last month. Two
of the three indicators of job security remained steady
this month as more than four in ten (43 per cent) consumers
report they are more confident about current job security
than six months ago (compared to 43 per cent in January).
Expectations regarding future job loss remained low this
month, with fewer than one in five (13 per cent) reporting
future job loss is likely (compared to 16 per cent last
month). Americans reporting personal job loss experience
improved significantly, with only one quarter (26 per cent)
saying that they or someone they know personally have lost
their job as the result of economic conditions (compared
to 32 per cent in January).
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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