U.S. consumer sentiment improves, driven by strong increase
in expectations for the future according to RBC CASH Index
NEW YORK, September 11, 2008 — Although the
calendar indicates the end of summer is quickly approaching,
it appears consumer confidence may be heating up, according
to the most recent results of the RBC CASH (Consumer Attitudes
and Spending by Household) Index, which advanced for the second
consecutive month. Overall consumer confidence climbed 35
points to stand at 69.2, compared to 33.8 in August. This
month's RBC CASH Index was buoyed by an 81 point increase
in Americans' expectations for the future. Gains also were
made in every other facet of consumer sentiment, including
assessments of current conditions, investing and job security.
"The dramatic rebound in consumer sentiment this month
is as startling as some of the developments in recent weeks,"
said T.J. Marta, Economic and Fixed Income Strategist for
RBC Capital Markets. "The prices of oil and gasoline
are down 30 per cent and 12 per cent, respectively, from their
peaks in July. The bailouts of Fannie Mae and Freddie Mac
announced during the polling period represent a sweeping and
historic move, which many hope will significantly mitigate
the housing correction. In addition, this month's survey occurred
immediately after the Republican convention and just a week
following the Democratic convention, both of which have generated
hope for change in Washington."
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 1,044 U.S. adults polled from September
5 - 9, 2008, by survey-based research company Ipsos Public
Affairs. The margin of error was ±3.1 per cent.
Highlights of the survey results include:
- Advancing out of negative territory for the first time
in 2008, the RBC Expectations Index rose to
76.3 from its -4.7 reading in August. The shift in the index,
which signals a much more optimistic assessment that economic
conditions will begin to improve soon, is due largely to
an improvement in Americans' expectations for personal finances
and their local economy. This month, nearly four in ten
consumers (38 per cent) believe their personal financial
situation will be stronger six months from now (compared
to 29 per cent in August). In addition, one-third of Americans
(34 per cent) believe their local economy will be stronger
six months from now (compared to 23 per cent last month).
Past experience demonstrates that attitudes regarding the
future are more volatile and subject to events-based swings.
This suggests that the expectations results should be viewed
with some degree of caution. However, the strength of the
positive shifts in the August and September results reinforce
the claim that attitudes are moving toward a more optimistic
- The RBC Current Conditions Index improved
markedly in September to 55.2, compared to 36.7 in August.
Americans' assessments of current local economic conditions
rose this month with 14 per cent rating their local economy
as strong, compared to 10 per cent last month. In contrast,
ratings of current personal finances held steady in September,
with one in four consumers (25 per cent) rating their current
financial situation as strong, compared to 23 per cent in
- Consumers' confidence in the investment climate also climbed
this month sending the RBC Investment Index
to a reading of 63.8, up from 42.6 in August. Thirty-one
per cent of consumers reported they are more confident in
their ability to invest, compared to 25 per cent last month.
Americans' attitudes regarding both stock and real estate
investments also showed slight gains in September. One-third
of consumers (33 per cent) believe the next 30 days will
be a good time to invest in the stock market, compared to
28 per cent in August. More than four in ten consumers (44
per cent) believe the next month will be a good time to
buy real estate, versus 41 per cent last month.
- Although other facets of the economy are beginning to
show improvement, consumers are still somewhat guarded about
the job market, as evidenced by the increase in the RBC
Jobs Index by only 9.7 points in September to 95.5,
compared to 85.8 last month. Americans' confidence regarding
overall job security improved this month, while expectations
about personal job loss experience held steady. This month,
the share of consumers who say it is likely that someone
close to them will lose their job in the next six months
held steady at 23 per cent, compared to 25 per cent in August.
In addition, 43 per cent of Americans reported job loss
in their immediate circle, compared to 41 per cent in August.
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
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Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882
Kevin Foster, RBC Capital Markets, (212) 428-6902