Consumer confidence slides as joblessness snowballs, according
to RBC CASH Index
But four in ten consumers say country is now on the right
NEW YORK, February 12, 2009 — Continuing a year-long
decline, U.S. consumer sentiment hit new all-time lows in
February on news of accelerating joblessness, according to
the most recent results of the RBC CASH (Consumer Attitudes
and Spending by Household) Index. As a result, the overall
RBC CASH Index stands at 1.6 for February 2009, down from
13.3 in January. This is the first time in the seven-year
history of the Index that it has dropped into the single digits.
"The continued decline of consumer confidence comes
in the face of rising unemployment and reports of big layoffs
by major employers," said Marc Harris, co-head of Global
Research, RBC Capital Markets. "The bright side is that,
just weeks after President Obama's inauguration, four in ten
consumers say that the country is now on the right track,
a sharp turnaround from the past year. However, presidential
honeymoons are shorter these days, and consumers are likely
to expect the new administration to quickly show it is in
command and has a plan to turn things around."
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 February
5-9, 2009, by survey-based research company Ipsos Public Affairs.
The margin of error was ±3.1 per cent.
Highlights of the survey results include:
- With almost 600,000 Americans losing their jobs in January
and unemployment climbing to 7.6 per cent, the RBC
Jobs Index saw a drop of nearly 20 points in February
to 42.3, compared to 61.8 last month. The February number
was the largest single-month decline since the Index was
introduced, and the fifth straight month in which this index
has hit a new low. Declines in job security follow real
experiences in job loss: More than three in five Americans
(62 per cent) say they or someone in their close circle
have lost their job in the past six months, up from 53 per
cent last month.
- Showing the effects of growing anxiety over job losses,
the RBC Expectations Index declined to -28.1
in February from -11.3 in January. There is a bright spot:
The number of Americans who say that the country is on the
right track jumped to
42 per cent in February from the 20s and low 30s, where
it had been mired for most of the last year.
- The RBC Current Conditions Index dropped
to another all-time low in February and currently stands
at 1.6, compared to 8.7 last month. This is the fourth consecutive
month in which this index has hit a new all-time low. Consumers
are increasingly feeling the effects of the recession, with
two in five (39 per cent) saying their personal financial
situation is currently weak and two-thirds (67 per cent)
saying they now are less comfortable making household purchases
than they were six months ago.
- The RBC Investment Index currently stands
at 17.6, down from 22.5 in January. This index has also
declined to an all-time low for the fourth consecutive month.
Two-thirds (66 per cent) of consumers continue to say they
are less confident now than they were six months ago in
their ability to make investments for the future, and 70
per cent think it is a bad time to invest in the stock market.
"Consumer confidence and economic recovery are in a
chicken-and-the-egg situation. The economy can't begin to
recover without people spending and investing. Yet without
signs of recovery, consumers and investors will stay on the
sidelines," added Harris.
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