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RBC CASH Index finds U.S. consumer confidence weakens on
the heels of stock market tumble
NEW YORK, March 9, 2007 — Unable to shrug off
the effects of the recent sharp drop in the stock market,
consumer confidence weakened in March, 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. Softening of consumer confidence
was evident across the board as assessments of current conditions,
future expectations, investing and job security all declined
this month. As a result, the RBC CASH Index, released today
by RBC Financial Group, decreased nearly 11 points to 92.3,
compared to 103.0 in February.
"Consumer confidence still remains relatively high by
historical standards, but is being weighed down by the combination
of the housing slowdown, the shock to the stock market in
late-February, a slight "untightening" of the labor
market and rising gasoline prices," said T.J. Marta,
Economic and Fixed Income Strategist for RBC Capital Markets.
"The key questions going forward are whether housing
really is beginning to stabilize, whether stock market volatility
abates and the extent to which the job market remains robust.
RBC believes consumer confidence and the economy will soften
in the next few months but then regain steam in the second
half of 2007."
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 March
5-7, 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' confidence in the future waned considerably
as the RBC Expectations Index dropped nearly
20 points this month to 49.3, down from 69.2 in February.
While one in four consumers (24 per cent) believe their
local economy will be stronger six months from now (compared
to 22 per cent in February), perceptions that the local
economy will be weaker six months from now nearly doubled,
from one in ten (11 per cent) last month to nearly two in
ten (17 per cent) in March.
- However, consumer expectations regarding personal financial
situations remained statistically unchanged in March, with
nearly four in ten respondents (39 per cent) saying they
expected improvements in personal financial strength six
months from now, compared to 36 percent in February. This
shift is within the survey margin of error, and was not
a substantial enough shift to offset the increase in pessimism
regarding future conditions for local economies.
- The RBC Current Conditions Index for March
stands at 107.5, compared to the 114.0 observed last month.
While evaluations of the current local economy held steady
this month, with more than one in five (23 per cent) rating
their local economy as strong (compared to 25 per cent in
February), ratings of current personal finances weakened.
Currently, one-quarter (26 per cent) of Americans rate their
current personal finances as strong, compared to three in
ten (29 per cent) rating personal finances similarly in
February. Although this shift is within the statistical
margin of error for the survey, the difference in opinion
was strong enough to produce a downward shift in the RBC
Current Conditions Index.
- The RBC Investment Index stands at 96.5,
down from 102.4 in February. Americans' comfort in making
household purchases held steady this month with 35 per cent
of consumers reporting they are more comfortable making
a major purchase like a home or car, compared to 32 per
cent in February. However, in the wake of the drop in the
stock market, attitudes regarding investing in the stock
market are more sharply negative. Consumers reporting that
the next month will be a good time to invest in the stock
market dropped to 41 per cent from 46 per cent in February.
In addition, half of consumers (52 per cent) believe the
next 30 days will be a bad time to invest in the stock market,
compared to only 42 per cent in February.
- Consumer confidence regarding job security remained the
strongest facet of consumer sentiment this month, experiencing
only a slight overall decline as the RBC Jobs Index
for March stands at 128.4, compared to 131.9 in February.
Consumers appear of two minds regarding job security: While
almost half (47 per cent) report they are more confident
about personal job security than they were six months ago
(compared to 43 per cent in February), one in five (18 per
cent) report it is likely that they (or someone they know
personally) will lose their job as the result of economic
conditions in the next six months, up five points since
February. Personal job loss experience held steady, with
29 per cent reporting that they or someone they know personally
have lost their job as the result of economic conditions,
compared to 26 per cent last month.
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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