U.S. consumers beginning to shed anxiety about economy:
RBC Consumer Outlook IndexConsumers still cautious about spending and investing;
Another "stay-cation" summer
NEW YORK, May 6, 2010 — Americans are
beginning to shed their anxiety about the economy which has
dominated consumer sentiment over the past two years, and
are less pessimistic about both their local economies and
job security, according to findings from the RBC Consumer
Outlook Index. Driven by improving attitudes about the local
economy, the RBC Consumer Outlook Index climbed to 72.7 in
May 2010, up 8.1 points from April's 64.6 level. However,
consumers remain very concerned about their personal finances
and deeply skeptical about investing and the national economy.
The uptick in consumer confidence has been slow, since many
consumers do not see things as especially stronger than last
month. The share of consumers rating their local economy as
"very weak," at 52 per cent, continues to drop,
down from 55 per cent in April and 59 per cent in March. In
addition, 22 per cent expect their local economy to grow stronger
in the next six months, up from 18 per cent last month.
Consumers are also slightly less concerned about job security.
Forty-two per cent of consumers say it is unlikely that someone
they know will lose their job in the next six months, significantly
better than the 36 per cent saying that in April. However,
the number of consumers actually experiencing job loss in
their immediate circle is unchanged from last month, at 49
per cent.
"This month's RBC Consumer Outlook Index shows that
consumers' negative attitudes are moving towards neutral,
but not yet into positives - they are not yet ready to say
that things have gotten better, especially when it comes to
the national economy," said Marc Harris, co-head of Global
Research at RBC Capital Markets. "Few Americans are ready
to say they are enjoying good times."
Despite consumers' increased confidence in employment and
the local economy, they remain very concerned about the national
economy. Overall, 31 per cent of consumers believe the U.S.
economy will improve in the next year, while 26 per cent believe
it will worsen and 43 per cent expect it to stay the same.
Summer spending plans are a historically good barometer of
consumer sentiment, and this year's plans show consumers are
remaining cautious. Fewer than one-in-eight consumers say
they plan to spend more this year than last on travel and
vacations (12 per cent); entertaining and socializing (11
per cent); apparel or clothing (eight per cent); and dining
out (eight per cent).
With summer vacations approaching, a large majority of consumers
plan to stay at home on "stay-cation" (63 per cent)
or drive somewhere for a vacation (59 per cent). Consumers
are much less likely to fly domestically for a vacation (26
per cent) or travel internationally (12 per cent).
More broadly, the share of Americans thinking the United
States is generally on the wrong track climbed to 60 per cent
in May, with 40 per cent saying the country is on the right
track. In April, 56 per cent said the country was on the wrong
track, and 44 per cent said it was in the right track.
Consumers remain concerned about their own finances. Half
of consumers (49 per cent) say that their personal financial
situation is bad compared to three months ago, with 45 per
cent expressing this in April. Similarly, 44 per cent continue
to describe their current finances as weak (compare to 43
per cent in April).
Looking ahead, only 20 per cent of consumers believe their
debt level will improve in the next three months, down from
23 per cent in April. A majority (52 per cent) believes that
their discretionary income, after bills are paid, will remain
the same in the next three months.
Concern about the broader economy has left consumers jittery
about investing in the markets or real estate. Only 20 per
cent of consumers think it is a good time to get into the
stock market, a level that is unchanged from last month. One-third
(32 per cent) say that this month is a good time to buy real
estate, down slightly from April's 34 per cent. However, the
number of consumers actually shopping for a new house inched
up to eight per cent in May 2010, compared to six per cent
last month.
The overall impression from this month's RBC Consumer Outlook
Index is of consumers slowly growing more confident about
their local situations but not yet convinced that a robust
recovery is here to stay at the national level.
"Consumers are saying 'Show-Me.' They want to see proof
of solid, long-term economic improvement before they are willing
to believe the recovery is here to stay," said Harris.
"Until they see that proof, they are going to continue
to withhold judgment, and that could affect their spending
and investment plans."
About The RBC Consumer Outlook Index
The RBC U.S. Consumer Outlook Index provides the most up-to-date
and comprehensive outlook of U.S. Consumers based on data
collected from interviews with a nationally representative
sample of 1,008 U.S. adults conducted over a five-day polling
period during the first week of each month by Ipsos, the world's
second-largest market and opinion research firm. The results
in this news release reflect some of the findings of the Ipsos
poll conducted April 29-May 2, 2010. The RBC Consumer Outlook
Index is released within 36 hours after the U.S. online panel
members are interviewed. Weighting is employed to balance
demographics and ensure that the survey sample's composition
reflects that of the U.S. adult population according to Census
data and to provide results intended to approximate the sample
universe.
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Contacts:
Loretta Healy,
Hubbell Group, lhealy@hubbellgroup.com, (781) 878-8882
Kait Conetta,
RBC, kait.conetta@rbc.com, (212) 428-6409
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