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U.S. consumer confidence stops free fall according to RBC
CASH Index
NEW YORK, August 7, 2008 — Tumbling oil prices
and a rebounding stock market appear to have placated Americans'
economic jitters, resulting in a mid-summer halt in the downward
spiral in consumer confidence that has persisted throughout
2008, according to the most recent results of the RBC CASH
(Consumer Attitudes and Spending by Household) Index. Overall
consumer confidence rose 19.2 points in August, as Americans'
worries over their economic prospects, current conditions
and investing eased, although concerns about job security
increased slightly. As a result, the overall RBC CASH Index
for August 2008, released today by RBC, stands at 33.8, compared
to 14.6 in July, which was an all-time low since inception
of the CASH Index in 2002.
"Consumer sentiment bounced back due to a moderation
in the prices of gasoline and oil as well as a modest rebound
in the equity markets," said T.J. Marta, Economic and
Fixed Income strategist for RBC Capital Markets. "However,
the ongoing decline in house prices, continued tight credit
conditions, and soft jobs market indicate that while sentiment
might be in the process of bottoming at a very depressed level,
it has not likely begun an upward trend. Historically, sentiment
indicators can remain depressed during extended economic slowdowns,
and they remained so for more than two years around the 1980-1
and 1990-1 recessions."
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 1,002 U.S. adults polled from July 31
- August 4, 2008, 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:
- Although still in negative territory for the eighth consecutive
month, the RBC Expectations Index increased
50 points to -4.7 in August. The shift in the index is due
largely to an improvement in Americans' expectations for
personal finances and the economy as a whole. This month,
nearly one in three consumers (29 per cent) believes their
personal financial situation will be stronger six months
from now (compared to 25 per cent in July). In addition,
nearly one in four (23 per cent) believe their local economy
will be stronger six months from now (compared to 18 per
cent last month). Despite this significant improvement,
more consumers believe the local economy will be weaker
than stronger six months from now (26 per cent weaker compared
to 23 per cent stronger), indicating the tenuous nature
of consumer expectations at the current time.
- The RBC Current Conditions Index for August
stands at 36.7, up 6.2 points after dropping sharply for
the past two months. The slight improvement in the index
is the result of a decrease in consumer negativity, rather
than a surge in confidence. Currently, one-third (33 per
cent) of respondents rate their personal finances as weak,
down from 37 per cent last month. Consumers' evaluations
of the current state of their local economy showed a similar
trend, as 42 per cent of Americans rated their local economy
as weak, down from nearly half (48 per cent) in July.
- The nascent improvement in consumer sentiment concerning
current conditions and expectations helped to boost the
RBC Investment Index 6.5 points, to a reading
of 42.6 for August. Americans' attitudes regarding both
stock and real estate investments also improved this month.
Nearly three in ten Americans (28 per cent) believe the
next 30 days will be a good time to invest in the stock
market, versus 24 per cent in July. Four in ten consumers
(41 per cent) believe the next month will be a good time
to buy real estate, versus 35 per cent last month.
- During the course of 2008, consumers' attitudes regarding
job security and job loss experience have softened substantially,
indicating the depth of current economic woes. And, while
other facets of the economy are beginning to show improvements,
consumers are still concerned about the job market, as evidenced
by the dip in the RBC Jobs Index to 85.8,
from July's 89.1 reading. Although Americans' expectations
regarding overall job security and personal job loss experience
held steady this month, consumers' confidence in their personal
job security weakened. This month, 63 per cent of Americans
say they are less confident about their personal job security
now than they were six months ago, compared to 58 per cent
in June.
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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