U.S. consumer confidence reaches highest level since the
2008 economic meltdown: RBC Consumer Outlook Index
Most Americans believe a combination of spending cuts and
tax increases are necessary to balance the federal budget
NEW YORK, December 2, 2010 — Registering
the highest reading since September 2008, the RBC Consumer
Outlook Index increased 3.2 points to 45.2 in December (42.0
in November) as a result of improved current conditions, employment
security, expectations and investment attitudes. Consumer
confidence has been on the rise for three months in a row
and has broken through the top of the recent range. However,
despite the recent improvements in consumer sentiment, the
RBC index remains well below its long-term average of 50 points
and continues to reflect a very modest economic recovery.
"Consumers are entering the holiday season with greater
hope and optimism than at any point since September 2008 -
just before the global financial crisis hit a fever pitch-closing
out 2010 on a high note," said Marc Harris, Co-Head of
Global Research at RBC Capital Markets. "Although the
RBC Consumer Outlook Index witnessed a sharp improvement this
month, it still reads below the long-term average, which is
in line with what we believe will continue to be a backdrop
of cautious consumer spending."
As Congress reconvenes this week to address a list of national
fiscal issues, most Americans believe the best way for Congress
to balance the Federal budget is through a combination of
spending cuts and tax hikes, according to the monthly RBC
Consumer Outlook Index. While more than two-thirds of Americans
(68 per cent) believe it will take a combination of tax increases
and spending cuts to close the federal budget deficit, one-quarter
(27 per cent) say that spending cuts alone can balance the
budget, and only five per cent are confident that tax increases
will be enough to reduce the deficit. Only 10 per cent expect
the deficit to shrink in 2011.
Despite the harsh fiscal realities facing the nation, this
month four-in-ten respondents (39 per cent) say the country
is on the right track, up from 35 per cent last month, and
they are beginning to feel better about their local economies.
For the first time this year, more Americans say their local
economies will be stronger in six months (24 per cent) than
weaker (20 per cent), and the percentage of consumers rating
their current local economy as weak dropped five points to
51 per cent, down from 56 per cent in November.
In terms of expectations for 2011, 54 per cent of respondents
predict inflation will be higher next year, while just nine
per cent say it will be lower. However, regarding the outlook
for unemployment and the stock market in 2011, U.S. consumers
are mixed. Thirty-five per cent of respondents predict unemployment
will go higher, while 25 per cent say it will decrease and
30 per cent say it will remain at its current level. One-quarter
(26 per cent) predict the stock market will go up while 24
per cent say it will go lower. Interestingly, 38 per cent
of consumers currently invested in the stock market expect
it to go higher next year.
Consumers also are more confident about employment security
for themselves and those in their inner circle. The number
of people reporting that someone they know has lost a job
in the past six months dropped to 43 per cent - the lowest
reading in 2010. Consumers reporting they are more confident
about job security jumped seven points this month, while those
who are less comfortable dropped three points.
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 1,007 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 November 19-22, 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.
Last month, the RBC Consumer Outlook Index was 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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