European debt crisis and gulf oil spill having little impact
on consumer spending: RBC Consumer Outlook Index
But spill and other crises raise fears about U.S. economic
NEW YORK, June 10, 2010 Despite being
bombarded daily by news about European sovereign debt issues,
the oil leak in the Gulf of Mexico and the U.S. federal deficit,
the vast majority of consumers say these and other crises
have had little impact on their current spending habits, according
to the monthly RBC Consumer Outlook. More than three-in-four
Americans (80 per cent) say that the European debt crisis
has had no effect on their spending habits, and 72 per cent
say that the Gulf oil spill will result in no change. Other
concerns, such as the federal budget deficit, stock market
volatility and continued high unemployment, also have had
Although Americans are not changing their personal spending
habits as a result of these crises, the RBC Consumer Outlook
Index finds deep concern about their impact on the economy.
Large numbers say the Gulf oil spill (68 per cent) or the
federal budget deficit (60 per cent) could slow recovery.
However, less than half of consumers (45 per cent) said that
European debt problems will harm U.S. economic recovery, although
a significant share (24 per cent) say they do not know enough
to offer an opinion.
"We are seeing significant confusion and uncertainty
among consumers, who have been battered by bad news over the
past month but are unsure about how, or whether, these developments
will affect them personally," said Marc Harris, co-head
of Global Research at RBC Capital Markets. "While Americans
are increasingly apprehensive about the strength and durability
of the recovery, they are not yet worried enough to make substantial
changes in their own spending habits."
Consumer confidence as measured by the RBC Consumer Outlook
Index is down nearly 15 points over the past month, to 58.4
in June from 72.7 in May, erasing all of the gains from earlier
this spring. The decline is mostly due to wavering confidence
in the economic future, with fewer consumers expecting the
economy to improve in the near future.
The decline in the RBC Consumer Outlook Index is driven
primarily by shaken confidence in the economic near future,
as just 28 per cent of consumers believe the U.S. economy
will improve in the next year, down from 31 per cent in May.
Only 15 per cent think the national economy will improve in
the next three months, down from 20 per cent in May. Similarly,
Americans' confidence in their local economies has declined,
with just 19 per cent believing their local economy will get
stronger in the next six months and 24 per cent believing
it will weaken.
Consumers also are increasingly concerned about the current
investment climate, particularly the stock market. Four-in-ten
consumers (43 per cent) think it is a bad time to invest in
the stock market, up significantly from 33 per cent last month.
Fewer are comfortable with the value of their investments,
with only 15 per cent thinking their investments will improve
in value over the next three months. Doubts are also returning
about real estate, with 41 per cent saying this is not a good
time to invest in property, compared to 38 per cent in May.
Feeding worries about expectations, consumers report that
their current financial situation is not as robust as a month
ago. More consumers evaluate their current financial situation
as weak (47 per cent) this month than last (44 per cent).
However, comfort making household purchases is essentially
unchanged, indicating most households think that their finances
are stable, if poor.
In spite of a return to consumer pessimism, all is not bleak.
The employment picture continues to improve, with only 45
per cent saying they or someone in their circle has experienced
job loss recently, down from 55 per cent in February. Similarly,
fewer Americans are currently worried that they or someone
in their household is likely to lose their job in the near
future, with just 28 per cent expressing such fears, down
from 32 per cent in May.
"Given the negative news cycle in recent months, it
is no surprise that the June RBC Consumer Outlook Index shows
a sharp drop in consumer confidence this month," said
Harris. "On the positive side, Americans are feeling
a little more secure about their jobs, one of the most important
foundations of confidence, so we may see a rebound in consumer
sentiment once these crises move off the front pages."
Emphasizing the doubts about where the country is headed,
two-thirds of Americans (65 per cent) now say that the nation
is on the wrong track, compared to just 35 per cent who say
it is moving in the right direction. In May, 60 per cent of
Americans felt the nation was on the wrong track.
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 1,004 U.S. adults conducted over a multi-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 June 4-7, 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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