U.S. consumer sentiment continues downward slide, according
to RBC CASH Index
Declining expectations for the future drive drop in confidence
NEW YORK, July 16, 2009 — Led by a dramatic
decline in the expectations of U.S. consumers for the near
future of the U.S. economy, the most recent results of the
RBC CASH (Consumer Attitudes and Spending by Household) Index
show a marked downward shift for July 2009, continuing the
slide begun last month. The RBC CASH Index for
July 2009 stands at 22.4, an 11.9 point decline from June's
"The RBC CASH Index for July confirms what we first
saw last month: consumers are getting realistic. They're coming
to grips with the idea that we will not see a quick economic
turnaround but instead face a lengthy, drawn-out recovery,"
said RBC Capital Markets Managing Director Larry Miller. "Consumer
confidence is resetting to the levels seen earlier this year
and is likely to remain there until there is concrete evidence
of a turnaround."
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 July 9-13,
2009, by survey-based research company Ipsos Public Affairs.
The margin of error was ±3.1 per cent.
Highlights of the survey results include:
- Consumers' expectations regarding future economic conditions
hit a wall this month, as the RBC Expectations Index
plunged sharply, dropping 36.1 points to 4.8, compared to
40.9 in June. After four consecutive months of rising hopes
that the economy would turn around in the next six months,
the longest such increase in expectations since the launch
of the index in 2002, many Americans are coming to grips
with the idea that it may still be some time before things
- Consumer confidence in current conditions has stabilized
after a dramatic drop last month, with the RBC Current
Conditions Index for July 2009 standing at 23.3,
an insignificant decrease of 0.5 points compared to June's
23.8. This stability follows a plunge of nearly 50 per cent
last month, the largest single drop in the index since the
start of the recession. Analysis indicates that, prior to
the drop in last month's survey, current conditions were
buoyed artificially by soft gas prices and tax refunds.
- The RBC Investment Index showed little movement
this month, standing at 30.9 for July 2009. This is a 3.5
point decrease from June's level of 34.4. While most of
the decrease in investment confidence stems from consumers'
weakening financial conditions, they also are less comfortable
with investing and major spending. Nearly two-thirds (64
per cent) of consumers say they are less confident now in
their ability to make investments for the future, including
retirement and education, than they were six months ago.
Consumers' confidence in the stock market also waned after
the rollback in the equity markets that began in mid-June.
Currently, 68 per cent of consumers say it is a bad time
to invest in the stock market, compared to 63 per cent in
- Despite the unemployment rate reaching the highest level
in 26 years, the RBC Jobs Index for July saw
a minor uptick to 50.5, up 3.8 points from the 46.7 observed
in June. The slight increase in confidence in the job market
comes alongside growing indications that the rate of job
loss is slowing. In July, 31 per cent of consumers say it
is likely that they or someone in their family or friends
will lose their job in the next six months. This is down
from the 35 per cent expressing job security concerns in
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