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Half of Americans plan to spend less this year than last
on holiday shopping: RBC Consumer Outlook Index
Two-thirds of Americans say nation headed in the wrong direction
NEW YORK, November 4, 2010 — In a reflection
of continuing concern about the U.S. economy, 46 per cent of
Americans plan to spend less this year than last on holiday
shopping, and an additional eight per cent plan to spend nothing
at all. Even half (50 per cent) of families with children at
home plan to spend less, with an additional six per cent of
these families planning to spend nothing at all, according to
data from the monthly RBC Consumer Outlook Index. In a worrisome
sign for retailers, just seven per cent of Americans overall,
and nine per cent of families with children, expect to spend
more this holiday season than last.
The survey, conducted immediately before this week's U.S.
midterm elections, showed that the number of consumers who
believe the country is headed in the right direction slipped
to 35 per cent, down from 37 per cent in October. The number
who believe the country is on the wrong track edged up two
points, to 65 per cent. In addition, 69 per cent of Americans
think the U.S. economy and their own financial situation will
stay the same or worsen over the coming year.
"Even in the face of soft consumer confidence, spending
accelerated in the third quarter. This disconnect will have
to be resolved, and the first real test is upon us with the
beginning of the holiday shopping season," said Marc
Harris, co-head of Global Research at RBC Capital Markets.
"If it turns out that the spending last quarter was simply
the result of pent-up demand and consumers are returning to
frugality just in time for the holidays, this will not come
as good news for retailers."
Americans' reluctance to increase or even maintain their
holiday spending is consistent with the continued weak consumer
confidence reflected in the results of the latest RBC Consumer
Outlook Index, which edged up this month to 42.0 on a scale
of 0-100. This month's score was only slightly higher than
the 41.0 in October and the 39.9 of November 2009. The consumer
confidence barometer has been essentially flat since a surge
in the middle of last year.
The scores of the RBC Consumer Outlook Index's sub-indices
for November, all on a scale of 0-100, were also slightly
higher, noting small improvements for the Current Conditions
(31.6 this month vs. 30.8 in October); Expectations (54.1
this month vs.53.5 in October); Investments (35.9 this month
vs. 35.3 in October); and Jobs (49.4 this month vs. 47.5 in
October) sub-indices.
This month's index reflects the analysis of data from a survey
of 1,032 U.S. adults taken October 29-November 1, 2010.
"The RBC Consumer Outlook Index saw a modest improvement
this month but remains stuck in the same range that it has
been in since the middle of last year," said Harris.
"Confidence is effectively shackled by continued uncertainty
around a weak economic recovery that has produced the second-fewest
number of jobs at this point in a post-war recovery. The real
indicator of where consumer confidence is headed will come
in the next few weeks, as Americans digest the results of
the midterm elections."
Additional highlights from the November 2010 RBC Consumer
Outlook Index:
- Consumers are in holding pattern when it comes to investing.
Consumers unsure about whether the next 30 days would
be a good time to invest in real estate property increased
to 29 per cent, up from 24 per cent last month. Again this
month, 42 per cent of Americans report no change in their
comfort level in making general household purchases and
48 per cent say that they are unsure if it is a good time
to invest in the stock market - including 40 per cent of
those who already own stocks.
- Confidence in job security increasing. The RBC
Jobs Index climbed to 49.4 this month, up from the October
level of 47.5. The nearly two-point increase is the strongest
month-over-month improvement in the Jobs Index since February.
The positive movement in the Index is driven by the significant
increase in the number of Americans who think it is unlikely
that anyone in their inner circle will lose their job in
the next six months, which jumped five points in November
to 43 per cent, a high mark for the year. In addition, the
portion of consumers who say they do not know anyone who
has lost their job in the past six months increased to 54
per cent, up from 52 per cent in October.
- Consumers split on the direction of housing prices
in their neighborhood. During the next 12 months, 29
per cent of Americans believe the prices of homes in their
neighborhood will increase, while 28 per cent expect home
prices to fall. Not surprisingly, the share of Americans
who say they are in the market for a new home is only nine
per cent, unchanged from last month.
- Americans' willingness to make major purchases improving.
Consumers are warming to the idea of opening their wallets
for a major purchase such as a car, household appliance
or a vacation in the next six months. Consumers who said
they expect to spend more on major purchases in the next
six months increased to 11 per cent this month from eight
per cent in October, and those who said they would spend
less on such purchases dropped to 44 per cent, down from
48 per cent in October.
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
1,032 U.S. adults conducted October 29-November 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.
Effective this month, the RBC Consumer Outlook Index has been
re-scaled to correspond with a 0-100 scale in order to maximize
the interpretability of month-to-month and year-over-year
changes in consumer outlook. The Consumer Outlook Index is
still based on the same set of underlying questions and continues
to capture the same sense of American consumer confidence.
The new bounded range for the RBC Consumer Outlook Index produces
more controlled monthly fluctuations, which enables greater
ability to diagnose meaningful changes across the time series.
Re-scaled scores have been calculated retroactively for all
historical data. The historical mean for the rescaled Consumer
Outlook Index COI is 50. This indicates that a score over
50 represents above-average consumer confidence and a score
below 50 represents below-average consumer confidence.
Contacts:
Kait Conetta, RBC, kait.conetta@rbc.com,
(212) 428-6409
Greg Hamrock, Hubbell Group,
ghamrock@hubbellgroup.com,
(781) 878-8882
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