Majority of American families plan to spend less than last
year or nothing at all on back-to-school shopping, according
to RBC Consumer Outlook Index
Consumer confidence higher this month but remains weak;
housing outlook mixed
NEW YORK, August 5, 2010 — Six-in-ten
American families with children at home (62 per cent) say
they plan to spend less this year than last or nothing at
all on back-to-school shopping, according to the RBC Consumer
Outlook Index. Although most families are cutting back, nine
per cent say they actually plan to spend more and 29 per cent
say they will spend about the same this year as last year
on back-to-school items.
Despite a planned reduction in back-to-school spending, a
barometer of consumer sentiment, consumer confidence as measured
by the RBC Consumer Outlook Index rebounded this month, increasing
to 63.9, compared to 47.2 in July. The improvement in the
Index is driven primarily by less negative sentiment about
job security and future economic prospects, rather than any
sudden optimism.
"The pull-back in back-to-school shopping is a true
sign of the times," said Tom Porcelli, U.S. Market economist
at RBC Capital Markets. "The economic recovery has been
slow and uneven leading to diminished expectations for many
Americans. As they adjust to living in this new economic reality,
consumers continue to remain very cautious when it comes to
personal spending."
While this month's index shows consumers' interest in investing
in real estate is edging up, they are not at all sure about
the fate of the housing market. Asked how they expect the
prices of homes for sale in their neighborhood will change
in the next year, 32 per cent said they would increase, 37
per cent said they would stay the same and 31 per cent said
they would decrease.
Despite ongoing job losses, relative confidence in personal
job security showed signs of improvement this month. Forty-three
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 35 per cent saying that in July. However,
the number of consumers actually experiencing job loss in
their immediate circle was 53 per cent this month, basically
unchanged from July's 52 per cent.
Although the recession continues to have lingering effects,
consumers' assessments of the future of the economy were less
pessimistic this month. More than half of Americans (54 per
cent) say the economy in their local area remains very weak,
yet only 23 per cent of consumers expect their local economy
to weaken in the next six months, down from 28 per cent last
month. More broadly, 40 per cent of Americans say the national
economy will get worse in the next six months, compared to
44 per cent in July.
The survey also found that consumers continue to be concerned
about the soundness of the market and are increasingly wary
about investing. This month, 40 per cent of consumers say
that this is a bad time to invest in the stock market, compared
to 34 per cent in July. However, the share who say it is a
good time to invest in the market remained unchanged from
last month at 16 per cent.
Consumers are, however, feeling better about where interest
rates are headed this month. Only 36 per cent say that interest
rates will go up in the next six months, compared to 41 per
cent in July. Americans are also feeling better about purchasing
real estate, with 35 per cent saying it is a good time to
buy property, up from 31 per cent last month.
"Consumers are feeling tapped out and are not at all
convinced that their financial and employment situations are
stable," said Porcelli. "What appears to be more
likely is that fears and concerns are subsiding and more consumers
are saying 'things are about the same'. Unfortunately for
us all, 'the same' reflects a fairly poor economic climate."
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 of
1,008 U.S. adults conducted July 28 - August 1, 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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