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U.S. consumer confidence stabilizes after September low,
according to RBC CASH Index
NEW YORK, October 5, 2007 — Consumer confidence
levels improved considerably in October after tumbling to
a 16-month low in September, according to the most recent
results of the RBC CASH (Consumer Attitudes and Spending by
Household) Index, which measured the attitudes of 1,005 Americans
earlier this week. Consumer sentiment stabilized across all
surveyed areas, with the biggest increases occurring in the
areas of economic expectations and current conditions. However,
this improvement was driven not by significant increases in
consumer optimism, but rather a leveling out of pessimism.
As a result, the RBC CASH Index for October 2007 stands at
80.6, up more than nine points from its 71.1 level in September.
"After collapsing in September, the RBC CASH Index rebounded
in October, with consumers becoming more positive in the wake
of the Fed's rate cut and the calming of the financial markets,"
said T. J. Marta, Economic and Fixed Income Strategist for
RBC Capital Markets. "However, the lack of a complete
recovery in the Index shows that August's credit crisis has
had a profound affect on consumers' psyches, making them view
the financial landscape warily."
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 1,005 U.S. adults polled from October
1-3, 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' economic expectations increased significantly
this month, reversing the free-fall observed in September.
The RBC Expectations Index for October rose
11 points to 25.7, compared to 14.4 last month. Job loss
expectations were the driving force behind the improvement,
as 55 per cent of consumers reported it is unlikely they
or someone they know will lose their job in the next six
months, up from 49 per cent in September. While expectations
for personal finances basically held steady in October,
negative expectations for respondents' local economy leveled
off, with only 20 per cent reporting that the economy will
be weaker, compared to 23 per cent in September.
- The RBC Current Conditions Index increased
more than 10 points, reaching 101.1 in October, compared
to 90.5 last month. Americans' current perception of their
local economy is the main driver behind the improvement
as significantly fewer consumers currently have a pessimistic
assessment of their local economy. Only one-quarter (26
per cent) of Americans rate their local economy as weak,
compared to just under one-third (31 per cent) who felt
similarly in September.
- Consumers' views of the investment climate also showed
improvement this month. The RBC Investment Index
for October increased four points to 92.5, after dropping
almost 10 points in September to 88.3. Consumer comfort
levels for future investments edged up this month, with
41 per cent of consumers reporting they are more confident
in their ability to invest in the future, compared to 37
per cent in September. Additionally, the percentage of Americans
reporting they are less confident in investing declined
slightly, from 44 per cent in September to 41 per cent now.
- Americans' perception of job security rose nearly nine
points this month, and as a result, the RBC Jobs Index
for October stands at 122.5, compared to September's 113.6
level, which had been the lowest level for 2007. Forty-one
per cent of Americans reported feeling less confident about
their job security, down four points from last month. Personal
job loss experience held steady in October, with 31 per
cent of consumers reporting job loss in their immediate
circle compared to 33 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 A. Healy, The Hubbell Group, Inc., (781) 878-8882
Kevin Foster, RBC Capital Markets, (212) 428-6902
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