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U.S. consumer sentiment rebounds in August after two-month
slide, according to RBC CASH Index
Stock market, housing woes don't restrain consumer confidence
- for now
NEW YORK, August 10, 2007 — After sliding for
most of 2007, consumers' views about current and future economic
conditions rebounded this month, according to the most recent
results of the RBC CASH (Consumer Attitudes and Spending by
Household) Index, which measured the attitudes of 1,003 Americans
earlier this week. As a result, the overall RBC CASH Index
stands at 89.3 for August 2007. This is 13 points above July's
76.1 level and its highest level since March 2007.
The improving sentiment comes in spite of a volatile stock
market that has Wall Street calling for the Federal Reserve
to calm investors, concerns about credit, recent increases
in the jobless rate and lackluster July retail sales. Overall
consumer sentiment shows a reduction in consumer pessimism
after increasing negativity in June and July. In addition
to the overall increase in consumer confidence, strong gains
were made across all facets of consumer sentiment, including
assessments of current conditions, expectations for the future,
investing and job security.
"Consumer confidence rebounded this month, likely supported
by ongoing tightness in the jobs market and declines in both
the price of gasoline and mortgage rates," said T. J.
Marta, Economic and Fixed Income Strategist for RBC Capital
Markets. "However, the rise in the investment index might
prove short-lived if current market volatility persist."
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 1,003 U.S. adults polled from August
6-8, 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:
- In August, the RBC Job Index rose nearly
eight points to 124.5, compared to 116.8 in July. The biggest
reason for the improvement was a decrease in personal job
loss experience, with only one in three respondents (30
per cent) reporting job losses (compared to 34 per cent
last month). In addition, the share of consumers reporting
no personal job loss experience rose to 70 per cent in August,
up from 65 per cent in July.
- Consumers' confidence in the investment climate rose at
a greater rate than the small decrease experienced in July.
The RBC Investment Index climbed more than
14 points, and stands at 97.9, up from 83.6. Forty-three
per cent of consumers reported they are more confident in
their ability to invest, compared to 40 per cent in July.
- Expectations regarding future economic conditions also
increased sharply in August. The RBC Expectations
Index more than doubled, climbing to 43.9 from its
23.1 level in July, the lowest level in 2007. Expectations
regarding potential future job loss improved significantly,
with 56 per cent of consumers reporting it is unlikely they
or someone they know will lose their job in the next six
months (versus 50 per cent in July). Expectations for personal
finances also held steady.
- The RBC Current Conditions Index improved
markedly in August to 105.6, compared to 95.8 in July. Americans'
assessments of current local economic conditions rose this
month with 22 per cent rating their local economy as strong,
compared to 20 per cent last month. Ratings of current personal
finances improved slightly in August, with one in four consumers
(26 per cent) rating their current financial situation as
strong, compared to 24 per cent in July.
While overall optimism did not significantly increase, the
decreases in negative and pessimistic attitudes were substantial
enough to buoy the overall RBC CASH Index in
August. However, reduced pessimism cannot sustain continued
improvements in consumer sentiment. Without increases in positive
assessments, consumer confidence could easily revert to the
downward trend observed throughout 2007.
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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