Consumer sentiment continues downward trend, driven by steep
decline in future expectations, according to RBC CASH Index
NEW YORK, March 7, 2008 — Confronted with falling
housing values, rising foreclosures and oil prices spiking
above $100 a barrel, the mood of the U. S. consumer darkened
considerably this month, according to the most recent results
of the RBC CASH (Consumer Attitudes and Spending by Household)
Index. Led by a sharp drop in consumers' optimism for the
future, the overall RBC CASH Index, released today by RBC,
stands at 33.1 for March 2008, compared to 48.5 in February.
"The latest RBC CASH Index shows consumer confidence
continuing to decline, with the overall index and three of
the four sub-indexes reaching record lows," said T.J.
Marta, Economic and Fixed Income Strategist for RBC Capital
Markets. "The U.S. consumer, who has carried the economy
for the past half-dozen years, is in full defensive mode,
battered by falling housing values, spiking food and energy
prices, tightening lending standards, the teetering stock
market and hints of weakening in the labour market."
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 1,013 U.S. adults polled from March 3-5,
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:
- Americans' confidence in future economic conditions, as
measured by the RBC Expectations Index, plummeted
to -41.6 this month, down from the -7.0 reading in February.
The downturn in the index is being driven by a steep decline
in consumers' expectations for their local economy. In March,
more than one-third of consumers (35 per cent) believe their
local economy will be weaker six months from now, up from
28 per cent last month.
- The RBC Current Conditions Index dropped
nearly nine points to 54.7 in March, compared to 63.6 last
month, due to a significant weakening in consumers' evaluations
of the current state of the local economy. Currently, four
in ten Americans (40 per cent) rate their local economy
as weak, up from 35 per cent in February.
- Consumers' overall opinions regarding investing also fell
this month. The RBC Investment Index stands
at 56.7, down nearly six points from February's level of
62.6. Americans' attitudes regarding stock and real estate
investments dropped significantly in March. Nearly seven
in ten Americans (67 per cent) believe the next 30 days
will be a bad time to invest in the stock market, versus
61 per cent in February. And despite the drop in housing
prices, six in ten consumers (62 per cent) believe the next
month will be a bad time to invest in real estate, compared
to 58 per cent last month.
- Although eroding, Americans' confidence in job security
remained the strongest facet of consumer sentiment this
month. The RBC Jobs Index for March stands
at 99.2, down from 101.3 last month. Just over one-quarter
of Americans (28 per cent) report they are more confident
about their personal job security compared to six months
ago, which is down from 32 per cent in February.
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