Consumer confidence drops sharply on weak economic news,
according to RBC Index
NEW YORK, November 5, 2009 — Consumer confidence
fell across the board in the past month, according to the
most recent results of the RBC CASH (Consumer Attitudes and
Spending by Household) Index. The RBC Index for November 2009
stands at 30.2, down 21.6 points from October's 51.8 reading.
Higher gas prices, slumping retail sales, volatile stock markets
and continuing joblessness resulted in the sharpest one-month
drop in consumer sentiment since last autumn's financial crisis.
"This month's RBC Index results show that American
consumers are not yet convinced that their financial and employment
situations are stable," said Ira Jersey, head of U.S.
Interest Rate Strategy for RBC Capital Markets. "The
sharp drops in the Expectations and Investment sub-indices
highlight the challenges that personal consumption is likely
to face over the next several quarters. Although we have pulled
back from the abyss, consumer attitudes remain susceptible
to negative news."
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
1,002 U.S. adults polled from October 29-November 1, 2009,
by survey-based research company Ipsos Public Affairs. The
margin of error was ±3.1 per cent.
The decline in consumer confidence during the past month
erased the gains made in recent months, returning sentiment
to levels last seen early this summer. The weakness was consistent
across the RBC Index's four sub-indices, which measure consumers'
views of current conditions, their expectations for the future
and their confidence in investing and job security. Highlights
of the survey results include:
- Confidence in current conditions worsened substantially,
with the RBC Current Conditions Index for
November 2009 standing at 28.8, down 21.5 points from the
October reading of 50.3. The share of consumers saying their
personal financial situation is weak has increased to 33
per cent in November from 27 per cent last month. The unease
with personal finances is reflected in lower confidence
in making major purchases such as a house or car: Seven
in ten consumers (69 per cent) report they are less comfortable
than they were six months ago, compared to 63 per cent who
were less comfortable in October.
- Consumer expectations for the near-term economic future
fell substantially in November, driven primarily by weakness
in attitudes regarding local economies. The RBC Expectations
Index for November 2009 plunged to 21.9, a 32.3
point drop from its 54.2 reading in October, which had been
the strongest level of consumer expectations in 2009. The
primary reason for concern in the near term is with consumers'
local economies. Currently, fewer than one-third of Americans
(30 per cent) expect their local economy to be stronger
six months from now, down from 36 per cent in October.
- The RBC Investment Index dropped 21.4 points
this month, to 36.6 from a 58.0 level in October. The slide
stems primarily from decreased confidence in the ability
to invest in the future. The number of consumers who say
they are less confident investing for the future has risen
to 59 per cent, a sizeable increase in pessimism compared
to October, when 54 per cent said they were less confident.
- The RBC Jobs Index for November fell less
than the other indices, dropping 8.4 points to stand at
50.9, compared to 59.3 in October. Confidence in the job
market has declined, mirroring continuing job losses in
the economy. Worry regarding job conditions jumped in the
past month. Two-thirds of consumers (66 per cent) report
they are less confident about job security this month, compared
to 58 per cent who said they were less confident in October.
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
RBC, (212) 428-6409