U.S. consumer sentiment sags in June but expectations for
the future improve, according to RBC CASH Index
Decline in consumer confidence ends three-month rally
NEW YORK, June 11, 2009 — Consumers' economic
enthusiasm faded this month as the jobless rate reached a
26-year high, gas pump prices climbed almost daily and the
initial fervor for the government's economic remedies waned,
according to the most recent results of the RBC CASH (Consumer
Attitudes and Spending by Household) Index. Led by a sharp
drop in consumers' excitement about current economic conditions,
the RBC CASH Index for June 2009 stands at 34.3,
an 8.7 point decline from May's 43.0 reading, but nearly 33
points above the all-time low of 1.6 observed in February
"The June reading of the RBC CASH Index suggest that
consumers are disappointed by the recent spate of bad news,"
said RBC Capital Markets Managing Director Larry Miller. "However,
consumer expectations continue to show improvement."
Despite current financial woes, the report found that increasing
numbers of Americans are starting to believe the worst is
behind them. Expectations regarding personal economic security
have held steady since May and consumer pessimism also remains
fairly low with only 14 per cent of Americans saying they
expect their personal financial situation to weaken over the
next six months.
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 4-8,
2009, by survey-based research company Ipsos Public Affairs.
The margin of error was ±3.1 per cent.
Highlights of the survey results include:
- Increased prices at the pump, spent tax refunds, continued
job losses and prolonged economic instability drove the
RBC Current Conditions Index down nearly
50 per cent in June to a reading of 23.8, compared to 45
last month. This month's reading is the largest single drop
in the index since the start of the recession and erases
most of the gains posted in April and May. The decline in
the index is primarily driven by a downshift in consumers'
attitudes about the current strength of their local economy
and their worries about their current financial situation.
This month, 45 per cent of consumers view their local economy
as weak, up from 39 per cent in May. Coinciding with the
weak local economy, the share of consumers reporting that
their personal finances are strong dropped to 19 per cent
in June from 25 per cent last month.
- Consumers' weakening financial conditions and their discomfort
with investing and making major purchases also drove down
the RBC Investment Index. After dropping 15.2
points this month, the index stands at 34.4, compared to
49.6 in May. More than six in ten Americans (61 per cent)
report they are less confident in their ability to make
investments for the future, including retirement and education,
than they were six months ago (an increase from 59 per cent
- With the unemployment rate reaching 9.4 per cent, the
RBC Jobs Index slid to 46.7 in June, down
from May's 54.4 level. The decline this month essentially
erases the gains seen in May and may be a correction for
a premature increase in confidence. Consumers' concerns
were fed by increased pessimism about job security. This
month, more than two in three Americans (67 per cent) say
they are less confident about their personal job security
now than they were six months ago, compared to 61 per cent
- The RBC Expectations Index rebounded this
month, increasing 6.9 points to 40.9, compared to 34.0 in
May. This is the first time consumer expectations have
shown improvement over four consecutive months since the
launch of the index in 2002. Consumer expectations regarding
the health of the local economy improved slightly in June
as 37 per cent said they believe their local economy will
be stronger six months from now, compared to 36 per cent
last month. In addition, the proportion of consumers who
expect their local economy to be weaker in six months dropped
to 18 per cent this month from 20 per cent in May.
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, (212) 428-6902