U.S. consumer confidence bounces back in October but remains
fragile, according to RBC Index
NEW YORK, October 8, 2009 — Propelled by diminishing
concerns about current personal finances and job security,
U.S. consumer sentiment reached a twelve-month high in October,
according to the most recent results of the RBC CASH (Consumer
Attitudes and Spending by Household) Index. Gains were made
in every facet of consumer sentiment, with overall consumer
confidence climbing 11.8 points. As a result, the RBC Index
stands at 51.8 this month, compared to 40.0 in September.
This marks a 50-point improvement over the all-time low of
1.6 observed in February 2009.
"Federal Reserve Chairman Ben Bernanke's assertion three
weeks ago that the recession is over, together with a lack
of negative financial news since then, have had a galvanizing
effect on consumer sentiment," said RBC Capital Markets
U.S. economist Tom Porcelli. "Although the trends are
moving in the right direction, consumer confidence remains
fragile, and unexpected bad news about the economy or markets
could once again send sentiment spiraling downward."
The RBC 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 October 1-4, 2009, by survey-based
research company Ipsos Public Affairs. The margin of error
was ±3.1 per cent.
Highlights of the survey results include:
- The RBC Investment Index increased sharply
this month, climbing 21.1 points to 58.0 - the highest mark
for the Investment Index this year. Pessimism has declined
significantly since mid-summer, with the number of Americans
who report they feel less confident in their ability to
make investments for the future dropping to 54 per cent,
down from 64 per cent in July. Consumers who feel confident
about investing for the future continued to improve, increasing
to 33 per cent in October, from 31 per cent last month.
Consumer comfort levels for making major purchases, such
as a car or new home, also edged up, with 22 per cent of
consumers reporting they are more confident this month,
compared to 19 per cent in September.
- Fueled by a drop in consumer pessimism, the RBC
Current Conditions Index also reached a twelve-month
high in October as it climbed to 50.3, up 17.1 points from
the September reading of 33.2. The percentage of consumers
saying their personal financial situation is weak has dropped
to 27 per cent in October from 37 per cent last month. Americans'
assessment of current local economic conditions held steady
this month, with 41 per cent of consumers saying their local
economy is currently weak, essentially the same rate as
the 42 per cent observed in September.
- Consumers' near-term economic outlook brightened for the
third consecutive month, sending the RBC Expectations
Index to 54.2, up 12.7 points from September's level
of 41.5. Although consumers' expectations for both their
local economies and their personal finances are essentially
unchanged since last month, there is now much less concern
with impending job losses, resulting in the overall Expectations
Index improving. Currently, 36 per cent of consumers believe
the economy in their community will be stronger in the next
month, while only 16 per cent believe it will continue to
weaken, roughly the same split as in September.
- Americans remain guarded about the job market, as evidenced
by the slight increase in the RBC Jobs Index
by 5.8 points in October to 59.3, well below the 78.8 level
observed at this time one year ago. The most significant
influence on confidence in job security continues to be
real experiences in job loss. This month, 67 per cent of
Americans say they or someone in their close circle has
lost a job in the past six months, up from 63 per cent in
September. Despite ongoing job losses, relative confidence
in personal job security also continues to show signs of
improvement. Nearly one-third (31 per cent) of American
consumers say that they feel more confident in their job
security now than they did six months ago, up from 28 per
cent in September. Correspondingly, the proportion of consumers
who are less confident in their personal job security is
down to 58 per cent in October after reaching a high of
71 per cent in March.
The RBC 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
Kait Conetta, RBC, (212) 428-6409