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Consumer sentiment slumps in June, resuming a downward trend,
according to RBC CASH Index
NEW YORK, June 8, 2007 — Americans' confidence
in current economic conditions slumped this month, resuming
a downward trend after a brief resurgence in May, according
to the most recent results of the RBC CASH (Consumer Attitudes
and Spending by Household) Index. The survey, which measured
the attitudes of 1,000 Americans earlier this week, found
respondents much less confident about their current situation
and only mildly optimistic about their future prospects. As
a result of these mixed views, the overall RBC CASH Index,
released today by RBC, stands at 81.4 for June 2007, six points
below May's 87.1 level.
"In spite of continued jobs growth, U.S. consumer sentiment
is weighed down by several factors," said T. J. Marta,
Economic and Fixed Income strategist for RBC Capital Markets.
"Mortgage rates have spiked to their highest level since
last July, gasoline prices remain above $3 per gallon going
into the driving season and equity prices have begun to waver
after two months of gains."
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 June 4-6,
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:
- Americans' ratings of their current personal finances
dropped in June, with less than one-quarter (23 per cent)
saying their personal finances are "strong," down
from 31 per cent in May. By comparison, 27 per cent of consumers
rate their personal finances as "weak." In addition,
consumers said they were less comfortable making major purchases,
such as a home or a car. The combination of these more negative
attitudes caused the RBC Current Conditions Index
to sink to 96.8 in June, down more than 16 points from 113.2
in May.
- Consumers' overall opinions regarding investing also fell
significantly this month. The RBC Investment Index
stands at 86.1, down 21 points from May's level of 107.5.
The decline is due to consumers' decreasing confidence in
investing in the stock market and real estate.
- Although consumers feel much less positively about the
present, their confidence in future economic conditions
improved slightly this month, breaking a four-month string
of declining expectations about the future. The strengthened
opinions of future conditions produced an increase in the
RBC Expectations Index, which rose nearly
eight points to 32.2, up from 24.3 in May.
- Confidence in job security remained the strongest facet
of consumer sentiment this month. The RBC Jobs Index
for June stands at 126.9, up slightly from 123.8 in May.
Just 14 per cent of consumers expect that they or someone
they know will lose their jobs in the next six months, down
from 18 per cent in May.
"Consumers' weakening confidence in current conditions
and their investing prospects are consistent with the fact
that just one in five Americans thinks that the country is
headed in the right direction," added Marta. "While
consumers are optimistic about the future and their personal
job security, the return to declining overall consumer confidence
at the start of summer may be particularly troubling for the
travel industry and retailers that rely on vacationers for
a significant part of their annual business."
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
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Contacts:
Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882
Kevin Foster, RBC Capital Markets, (212) 428-6902
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