Drumbeat of bad news continues to drive consumer sentiment
RBC CASH Index for July reaches new low of the year
NEW YORK, July 3, 2008 — Soaring gas and food
prices and a stock market that just endured its worst June
performance since the Great Depression are draining consumers'
wallets as well as their confidence, 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 the employment market show signs of stabilizing,
Americans' confidence in future personal financial conditions,
current conditions and investments continue to weaken. As
a result, the overall RBC CASH Index for July 2008, released
today by RBC, dropped to 14.6, a new all-time low since its
inception in 2002, compared to 22.5 in June.
"The decline of the RBC CASH Index suggests that consumer
sentiment has fallen to the dismal level of the early 1980s.
Consumers are being ground down by the cumulative effects
of high gasoline and food prices, a falling stock market,
weakening housing values and a shaky job market," said
T.J. Marta, Economic and Fixed Income Strategist for RBC Capital
Markets. "Unfortunately, these negative conditions are
likely to persist well beyond when the last of the tax rebate
checks is cashed in July. Consequently, consumer sentiment
is unlikely to reach healthy levels anytime soon."
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 June 26
- 29, 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' confidence in the future waned considerably
as the RBC Expectations Index dropped nearly
11 points this month to -54.7, down from the -43.9 reading
in June. Bleak economic times appear to have become self-reinforcing
as fewer than one in five Americans (18 per cent) think
their local economy will strengthen in the next six months,
compared to 22 per cent last month. Worries over prospects
for their personal finances continued to plague consumers
as only one in four Americans (25 per cent) expect their
personal financial situation to improve over the next six
months, down from 31 per cent in June.
- Americans' negative views of the current state of their
personal finances helped to drive down the RBC Current
Conditions Index to 30.5 this month, compared to
40.5 in June. Currently, 37 per cent of respondents rate
their personal finances as weak, up from 30 per cent last
month. Consumers' evaluations of the current state of their
local economy also continued to deteriorate, as nearly half
of Americans (48 per cent) rated their local economy as
weak, up from 44 per cent in June.
- The RBC Investment Index stands at 36.1,
down nine points from June's level of 45.1. The decline
in Americans' attitudes regarding investing is being driven
mostly by the weakness in their current personal finances.
Seven in ten Americans (71 per cent) believe the next 30
days will be a bad time to invest in the stock market, versus
66 per cent in June.
- In spite of broader concerns about economic weakness,
Americans' confidence in job security remained stable this
month. The RBC Jobs Index for July stands
at 89.1, compared to 87.3 last month. The number of Americans
reporting personal job loss experience was statistically
unchanged, with 41 per cent reporting that they or someone
they know personally have lost their job as the result of
economic conditions, compared to 43 per cent last month.
In addition, confidence about personal job security held
steady, with 58 per cent of Americans saying they are less
confident about their personal job security now than they
were six months ago, compared to 57 per cent in June.
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
RBC (RY on TSX and NYSE) is Canada's largest bank as measured
by assets and market capitalization and one of North America's
leading diversified financial services companies. In the United
States, RBC provides personal and commercial banking, wealth
management, insurance, corporate and investment banking and
transaction processing services to about two million clients
through RBC Bank, RBC Insurance, RBC Wealth Management and
RBC Capital Markets. The company employs approximately 70,000
full- and part-time employees who serve more than 15 million
personal, business, public sector and institutional clients
throughout offices in North America and 36 countries around
the world. For more information, please visit www.rbc.com.
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Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882
Kevin Foster, RBC Capital Markets, (212) 428-6902