RBC Consumer Outlook Index: Consumers expect financial
reform efforts in Congress to have positive impact on U.S.
economy, stability of U.S. financial system
Americans divided on impact on their spending
NEW YORK, July 15, 2010 — As the year-long
effort in Congress to pass sweeping financial reform legislation
draws closer to final passage, U.S. consumers familiar with
the legislation expect both the U.S. economy and the country's
financial system to benefit from the final measure. According
to this month's RBC Consumer Outlook Index, four-in-ten Americans
familiar with the legislation expect the final legislation
to have a positive impact on the economy (41 per cent) as
well as the stability of the U.S. financial system (42 per
cent). However, the majority of Americans are not confident
in their knowledge of the bill: two-thirds say they don't
know enough about the legislation to offer an opinion.
While Americans are positive overall about financial reform,
they worry it will have a negative impact on profits for both
Wall Street (41 per cent negative impact vs. 30 per cent positive)
and Main Street (36 per cent negative impact vs. 31 per cent
positive). However, consumers are split on how the final legislation
will affect their own bottom line. Twenty-nine per cent of
consumers who are aware of the legislation say it will have
a negative impact on their personal spending habits, while
26 per cent say it will have a positive impact.
"Consumers following financial reform legislation appear
to expect the final results to have more of an impact on Wall
Street and business, which means, perhaps, the potential effect
on consumers' wallets is not yet resonating with them,"
said Marc Harris, co-head of Global Research at RBC Capital
Markets. "Americans are very cautious about making any
changes in their own spending habits as they continue to expect
a bumpy, drawn-out recovery."
Driven by renewed concerns about job security and the outlook
for the U.S. economy, consumer confidence as measured by the
RBC Consumer Outlook Index dropped more than 11 points, to
47.2 this month from 58.4 in June.
The share of consumers reporting that someone in their immediate
circle lost a job due to economic conditions increased three
points this month to 48 per cent, reversing a five-month downward
trend. Fears about employment security in their own households
also increased, as one-third of Americans say they are worried
that someone in their household will be laid off, up from
28 per cent last month.
Looking ahead, 44 per cent of Americans say the national
economy will get worse in the next three months, up from 38
per cent in June, and 30 per cent say that both the U.S. economy
and their own finances will get worse over the next year,
a three per cent increase since June.
Despite jitters about the future, most consumers view their
own near-term finances as stable, with 55 per cent saying
their ability to pay bills will remain the same over the next
three months (compared to 57 per cent in June) and 50 per
cent reporting their debt level will remain the same (compared
to 53 per cent last month). Moreover, more than one-third
(36 per cent) say that the country is headed in the right
direction, basically unchanged from last month (35 per cent).
The recent stock market rally helped to temper consumers'
worries about investing in the next month. Americans reporting
that the next 30 days will be a bad time to invest in the
stock market dropped to 34 per cent, down from 43 per cent
last month. Consumers already owning stock or bonds were also
more optimistic - with only 28 per cent saying the next month
would be a bad time to invest in the stock market, compared
to 40 per cent in June. In addition, consumers who believe
the next month will be a good time to buy real estate increased
to 31 per cent from 29 per cent in June.
"Despite the post-Independence Day stock market bounce,
many Americans remain cautious about investing, buying real
estate and other big financial decisions," said Harris.
"After the shock of the financial crisis, the housing
crash and the recession, it is likely to take many Americans
awhile before they regain their natural confidence about investing
for the future."
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 more than 1,000 U.S. adults conducted over a multi-day
polling period 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
July 8-11, 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:
Kevin Foster, RBC, kevin.foster@rbc.com,
(212) 428-6902
Kait Conetta, RBC, kait.conetta@rbc.com,
(212) 428-6409
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