Consumers expect home sale prices to decline, say construction
and home builder sector weaker than a year ago: RBC Consumer
Outlook Index
However, Americans more positive about their personal financial
health
NEW YORK, September 2, 2010 — The barrage
of negative housing data in the past month has taken a toll
on U.S. consumers, with 40 percent saying they expect the
sale prices of homes in their neighborhood to decrease over
the next year, compared to 31 percent who said this in August,
according to the monthly RBC Consumer Outlook Index. Only
one-quarter of Americans expect the sale prices of houses
in their neighborhood to increase in the next 12 months.
Concerns about home prices are spilling over into consumers'
perceptions of the financial stability of the entire construction
and homebuilder sector, with 59 percent saying they think
the sector is financially weaker than it was a year ago and
only 14 percent saying it is stronger. In fact, pluralities
of Americans think that businesses have gotten weaker across
the board, believing that retail stores (47 percent saying
they are weaker); Wall Street banks (44 percent); restaurants
(43 percent); auto manufacturers (41 percent); and community
banks (38 percent) all are financially less stable than they
were a year ago. Since some of these sectors, such as Wall
Street, have reported strong profits this year, but current
consumer perceptions may be shaded by broader concerns about
the overall economy.
In fact, consumer confidence as measured by the RBC Consumer
Outlook Index sank to its lowest level in six months, dropping
to 45.9, compared to 63.9 in August. The plunge in confidence
is being driven by falling expectations for the economy and
fears about job security. Nearly one-third of Americans (32
percent) are worried about losing their job and nearly half
(47 percent) personally know someone who already has lost
a job due to economic conditions.
"As long as Americans are worried about their jobs,
consumers' outlooks will remain volatile," said Marc
Harris, Co-Head of Global Research at RBC Capital Markets.
"Despite assurances that the Federal Reserve will intervene
if necessary to support the economy, consumers continue to
be wary about the direction of the economy and the country
more generally. Until they see concrete evidence of a solid,
long-term rebound, consumers will likely remain jittery."
On a positive note, Americans are somewhat more optimistic
about their own financial outlook. More than a quarter of
Americans (27 percent) feel that their personal financial
situation will be stronger in six months than it is currently,
compared to 21 percent who feel they will be worse off six
months from now.
The hopefulness may be tied to increased personal saving
rates as Americans try to pay down debt. Nearly a quarter
of consumers (24 percent) said they expect their debt levels
to improve in the next three months, compared to only 21 percent
who said this in August.
"With economic growth stagnating and housing sales tailing
off, consumers are cautious about spending. In fact, similar
to banks themselves, Americans appear to be in the process
of 'deleveraging' and paying down their credit and debt,"
said Harris
Overall, two-thirds of Americans (67 percent) feel that
the country is on the wrong track, the highest level this
year and up from last month when only 63 percent felt that
way. Just 33 percent say the country is headed in the right
direction, down from 37 percent last month and also a low
for the year.
Contributing to this sense that the country is headed in
the wrong direction, 45 percent of Americans think the U.S.
economy will get worse in the next three months, and only
12 percent feel it will improve. Fifty-nine percent of consumers
said the economy in their local community is weak, up from
54 percent last month.
With continued volatility in the stock markets, consumers
also remain cautious about investing in equities. Forty-one
percent of Americans say that now is a bad time to invest
in stocks, and only 13 percent see this time as a good opportunity
to invest in the equity markets.
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
1,009 U.S. adults conducted August 26 - August 30, 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.
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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