Post-holiday blues send consumer confidence to lowest level
in six years, according to RBC CASH Index
NEW YORK, January 11, 2008 — Instead of bringing
consumers a sense of renewed optimism, the New Year brought
a severe case of post-holiday blues which 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. Consumer confidence fell across the board and Americans'
expectations for the future dipped into negative territory,
according to the survey of 1,027 Americans taken earlier this
week. As a result, the overall RBC CASH Index, released today
by RBC, stands at 56.3 for January 2008, more than nine points
below December's 65.9 level.
"The decline in the overall Index, to its lowest level
since data collection began in 2002, highlights the impact
that rising food and fuel costs and declining housing values
are having on consumer confidence, said T. J. Marta, Economic
and Fixed Income Strategist for RBC Capital Markets."
With none of these headwinds likely to abate any time soon,
consumers could pull back further on spending, increasing
the risk of a recession.
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 1,027 U.S. adults polled from January
7-9, 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:
- Consumers' economic outlook plummeted into negative territory
during the past month, as seen in the RBC Expectations
Index, which reached - 8.2, compared to 7.9 in December.
January's reading represents the weakest level of optimism
for future conditions since Hurricane Katrina hit. The downturn
in the index is being driven by expectations that the economy
as a whole will be weaker six months from now. Nearly one
in three Americans (27 per cent) believe that their local
economy will weaken in the coming months; currently, only
one in five consumers (19 per cent) believe their local
economy will be stronger six months from now.
- The RBC Current Conditions Index slid more
than six points in January, down to 78.9, compared to 85.3
in December. Worries over the current state of the economy
outweighed positive views, with one-third of Americans (32
per cent) rating their local economy as weak, considerably
more than the 15 per cent who rate their local economy as
- Americans' dim view of their future prospects and current
conditions was mirrored in their outlook for making investments
or major purchases. The RBC Investment Index
declined more than three points to 76.3 this month, compared
to 79.7 in December. The shift in consumers' investment
confidence was driven by a decline in their confidence in
investing for the future. In January, only 33 per cent of
Americans reported they are more confident in their ability
to invest in the future, compared to 37 per cent last month.
Confidence in stock market dropped sharply as fewer than
one-third (30 per cent) of consumers indicated that the
next month will be a good time to invest in the stock market,
down from 36 per cent in December.
- Americans' perception of job security dropped this month,
but remains relatively strong. The RBC Jobs Index
for January stands at 106.9, compared to 113.9 last month.
Personal job loss experience increased by four points this
month, with 37 per cent of consumers reporting job loss
in their immediate circle, compared to 33 per cent in December.
In addition, only 32 per cent of Americans reported feeling
more confident about their job security, down four points
from last month.
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
- 30 -
Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882
Kevin Foster, RBC Capital Markets, (212) 428-6902