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RBC CASH Index

 

Consumers grim as expectations for future financial conditions continue to deteriorate, according to RBC CASH Index

NEW YORK, April 11, 2008 — Pessimism among U. S. consumers continues to spread as Americans' sentiments concerning the future turn particularly gloomy, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. The survey found that while consumer attitudes regarding current conditions and investments show signs of stabilizing, Americans' confidence in future personal financial conditions continue to weaken. As a result, the overall RBC CASH Index, released today by RBC, dropped to an all-time low this month since its inception in 2002 to 29.5, compared to 33.1 in March.

"The across the board downturn in the survey results indicates a potential retrenchment by consumers and corroborates suspicions that the economy has slipped into a recession," said T.J. Marta, economic and fixed income strategist for RBC Capital Markets. "Each index fell to a record low in April with the exception of the Jobs Index, which was less than one point above its worst level registered in 2003 - when the economy was showing signs of stalling in its recovery from the 2001 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 1,005 U.S. adults polled from April 7-9, 2008, by survey-based research company Ipsos Public Affairs. The margin of error was ±3.1 per cent.

Highlights of the survey results include:

  • Americans' gloomy outlook was evident in the RBC Expectations Index, which declined nearly seven points to -48.3, compared to -41.6 last month. While not as precipitous a decline as seen in the 34 point drop in March, the downturn in the index reinforces the overall pessimism consumers have regarding a quick economic recovery. The decline in the index is being driven by consumers' increasing negativity regarding expectations for personal finances. This month, one in five consumers (22 per cent) believes their personal finances will be weaker six months from now, up from 15 per cent in February.

  • The RBC Current Conditions Index, at 54.6, held steady when compared to the 54.7 registered last month. Again this month, Americans' negative views of the current state of their local economy dramatically outweighed positive views, with four in ten consumers (41 per cent) rating their local economy as weak, while only 15 per cent rate their local economy as strong. Attitudes toward the current state of personal finances remained unchanged in April, with 25 per cent of consumers once again rating personal finances as strong, and 31 per cent of consumers rating personal finances as weak.

  • Consumers' overall opinions regarding investing also remained stable this month. The RBC Investment Index, which was at 56.7 in March, currently stands at 56.4, a record low since the index was created in 2002. Two-thirds of Americans (65 per cent) believe the next 30 days will be a bad time to invest in the stock market, versus 67 per cent last month. Consumers' lack in confidence in real estate investments also held steady this month, as six in ten Americans (60 per cent) report they believe the next month will be a bad time to invest in real estate, compared to 62 per cent last month.

  • Job security continued to erode this month driven by an increase in personal job loss experience. The RBC Jobs Index reached its lowest level in four years in April, and currently stands at 97.0, down from 99.2 last month. Four in ten Americans (40 per cent) reported job loss in their immediate circle this month, up from 36 per cent in March.

The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.

- 30 -

Contacts:
Loretta A. Healy, The Hubbell Group, Inc.,
(781) 878-8882

Kevin Foster, RBC Capital Markets,
(212) 428-6902


 


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