U.S. consumer sentiment remains under siege after plunging
in October, according to RBC CASH Index
NEW YORK, November 13, 2008 — Although energy
prices have declined sharply, consumer sentiment remains under
siege due to persistent negative forces ranging from the escalating
job crisis to the prolonged housing debacle and the growing
credit crunch, according to the most recent results of the
RBC CASH (Consumer Attitudes and Spending by Household) Index.
Consumer confidence held steady in November, slipping only
2.3 points. Despite the overall outlook remaining gloomy,
Americans' economic expectations for the future increased
significantly. As a result, the RBC CASH Index currently stands
at 34.7, compared to 37.0 in October.
"The overall RBC CASH Index continues to sag back towards
the low established in July when sentiment was driven down
by record energy prices. Although we have had a sharp decline
in energy prices, consumer sentiment remains low as growing
joblessness, the decline in the stock market and the ongoing
housing market correction weigh on consumers' minds,"
said T.J. Marta, Economic and Fixed Income strategist for
RBC Capital Markets. One positive sign is that the expectations
subcomponent has climbed, likely reflecting optimism over
the Presidential election, declining energy prices and the
sweeping actions taken by the government to buoy the economy
and financial system."
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 November
6 - 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:
- The RBC Expectations Index rebounded this
month, increasing 18.2 points to 23.3, compared to 5.1 in
October. Expectations regarding the health of the local
economy improved in November as one-third of Americans (34
per cent) believe their local economy will be stronger six
months from now, compared to only 31 per cent in October.
In addition, the proportion of consumers who expect their
local economy to be weaker in six months dropped from 27
per cent last month to 24 per cent in November. The 10 per
cent gap between "stronger" and "weaker"
perceptions this month, compared to the four per cent gap
in October, contributed to the increase in the RBC
Expectations Index for November.
- The RBC Jobs Index for November stands at
74.0, compared to 78.8 last month. Americans are the most
pessimistic they have been about jobs since the inception
of the RBC Jobs Index in January 2002. Consumers'
jitters were fed by an increase in job loss experience.
This month, nearly half of Americans (48 per cent) report
having experienced job loss, either personally or in their
close circle, compared to 41 per cent in October.
- The RBC Current Conditions Index dropped
12.4 points to a 25.6 reading, compared to 38.0 in October.
The decline in the index is primarily driven by consumers'
worries about their current financial situation and an incremental
downward shift in their attitudes about the current strength
of their local economy. Currently, one-third (33 per cent)
of consumers view their current financial situations as
weak, up from 29 per cent in October, while only 21 per
cent view it as strong, down from 25 per cent last month.
- Consumers' discomfort with purchasing, investing and saving
is also driving down the RBC Investment Index.
After dropping 12.2 points this month, the RBC Investment
Index stands at 34.8, compared to 47.0 in October.
Americans are also more cautious regarding purchases. Seven
out of ten (71 per cent) consumers report they are less
confident in making a major purchase such as a home or car,
compared to 69 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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Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882
Kevin Foster, RBC Capital Markets, (212) 428-6902