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U.S. consumer confidence hits 16-month low according to
RBC CASH Index
NEW YORK, September 14, 2007 — Subprime worries,
softening job markets, rising gas prices and an unstable stock
market have taken a serious toll on consumer sentiment, 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. Consumer confidence
tumbled across the board, reaching the lowest level since
May 2006, as Americans view the current economy negatively
and display growing pessimism about the future. As a result,
the overall RBC CASH Index, released today by RBC, stands
at 71.1 for September 2007, more than 18 points below August's
89.3 level.
"The magnitude in the drop of consumer confidence is
not surprising given the rocky economic ride consumers are
experiencing," said T. J. Marta, Economic and Fixed Income
Strategist for RBC Capital Markets. "Americans have a
dim view of their current financial situation and an even
bleaker view of their future prospects. Although some of the
factors weighing on consumers could dissipate in coming weeks,
the decline in confidence is consistent with our view that
U.S. economic growth will moderate through the remainder of
the year."
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 September
10-12, 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 dropped sharply during the
past month, as seen in the RBC Expectations Index,
which declined nearly 30 points to 14.4 compared to 43.9
in August. Expectations about job loss grew gloomier as
only 49 per cent of consumers reported that it is unlikely
they or someone they know will lose their job in the next
six months, down from 56 per cent last month. Worries over
prospects for the local economy also increased, with 23
per cent of Americans expecting their local economy to be
weaker in six months, compared to 17 per cent in August.
The only bright spot is that consumers' expectations about
their personal finances held steady. More than one-third
(36 per cent) reported they believe their personal finances
will be stronger in six months, compared to 35 per cent
in August.
- Increased pessimism about job security, combined with
more personal job loss, drove the RBC Jobs Index
down nearly 11 points to 113.6, its lowest level of 2007.
Forty-five per cent of Americans reported feeling less confident
about their job security, up five points from last month.
Personal job loss experience in September increased by 3
points, with 33 per cent of consumers reporting job loss
in their immediate circle compared to 30 per cent in August.
- The RBC Current Conditions Index slid more
than 15 points in September, down to 90.5, compared to 105.6
in August. Negative views of the current state of
the economy outweigh positive views, with one in three Americans
(31 per cent) rating their local economy as weak, considerably
more than the 19 per cent who rate their local economy as
strong. Consumers' comfort level for making household purchases
fell to 35 per cent in September from 37 per cent last month,
and ratings of current personal finances also declined,
with 27 per cent of Americans rating their current financial
situation as weak, compared to 23 per cent in August.
- As consumers' views of both the current economy and their
future prospects darken, they are less confident of their
ability to make investments or major purchases. The RBC
Investment Index declined almost 10 points to 88.3
this month, compared to 97.9 in August. Consumers' investment
confidence declined on all measures with the largest decline
coming from confidence in investing for the future. In September,
44 per cent of Americans reported they are less confident
in their ability to invest in the future, compared to only
37 per cent in August.
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
About RBC
RBC (RY on TSX and NYSE) is Canada's largest bank as measured
by assets and market capitalization and one of North America's
leading diversified financial services companies. In the United
States, RBC provides personal and commercial banking, wealth
management, insurance, corporate and investment banking and
transaction processing services to about two million clients
through RBC Centura, RBC Insurance, RBC Liberty Insurance,
RBC Dain Rauscher and RBC Capital Markets. The company employs
approximately 70,000 full- and part-time employees who serve
more than 15 million personal, business, public sector and
institutional clients throughout offices in North America
and 34 countries around the world. For more information, please
visit www.rbc.com.
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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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