U.S. Consumer Confidence Hovers near Post-Recession Peak
as New Year begins: RBC Consumer Outlook Index
Consumers expect to spend most of the Social Security tax
cut
NEW YORK, January 6, 2011— Raising hopes
for higher consumer spending over the course of 2011, nearly
three-quarters of Americans (74 per cent) plan to spend at
least some of the extra money they will receive through the
one-year Social Security payroll-tax reduction that became
effective January 1, 2011, including 42 per cent who expect
to spend all or most of it, according to the monthly RBC Consumer
Outlook Index. Only one-in-four Americans (26 per cent) said
they plan to save all of their extra take-home pay from the
tax cut.
Consumer confidence in January as measured by the RBC Consumer
Outlook Index is at 44.9, hovering just below last month's
45.2 level, the post-recession peak. The slight dip in the
overall Index was countered by continued gains in employment
confidence, with the RBC Consumer Outlook Jobs sub-index edging
up to 52.1 from 51.8 in December and up 10 points (24 per
cent) from a year ago when it sat at 42.0.
"After rising for three straight months, confidence
has taken a little breather here in January," said RBC
Capital Markets Chief U.S. economist Tom Porcelli. "But
even with the modest pullback, we are still seeing a better
backdrop of consumer confidence as we start the New Year.
The jobs measure bucked the broader trend and posted a surprising
rise - even in the face of weaker overall confidence and an
unemployment rate that rose in December."
Additionally, pessimism about respondents' local economies
is at the lowest level seen in more than a year. Fewer than
half (47 per cent) of consumers currently rate their local
economy as weak, down from 51 per cent last month and 59 per
cent in September 2010.
The findings from the new survey were not uniformly positive.
While the Jobs sub-index improved this month, the other sub-indexes
all eased somewhat. The Current Conditions sub-index ticked
down to 35.0, from 35.6 last month. The Expectations sub-index
decreased to 55.3, from 56.1 last month. The Investment sub-index
slipped to 38.9, from 40.0 last month.
Nearly two-thirds of Americans (64 per cent) said the country
was on the wrong track, compared to 36 per cent who said it
was headed in the right direction. The "wrong track"
number was up from 61 per cent last month and remained above
the 60 per cent level for the ninth consecutive month.
Other survey findings support the notion that Americans remain
wary about the overall direction of the economy. Almost as
many of the survey respondents believe the country's economy
will worsen in the next year (24 per cent) as those who believe
it will get better (28 per cent), and nearly half (48 per
cent) think that the nation will continue struggling along
in much the same condition as in the recent past.
"The consumer is right to be cautious," said Porcelli.
"The recently enacted tax legislation will certainly
provide a boost to spending over the course of the year, but
we remain in an environment where job growth is modest, home
prices are stagnant at best and access to credit remains limited.
The bottom line is the path back to more normal levels of
confidence will not be a straight line."
With gift cards a popular holiday present, survey respondents
were asked how quickly they expect to use any gift cards they
receive. Half of the respondents (52 per cent) expected to
use any cards received within a month, and three-quarters
(73 per cent) within three months. Notably, one-in-seven respondents
(16 per cent) either has no plans to use their gift cards
or "often forgets about them."
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
1,007 U.S. adults conducted December 27-30, 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:
Kait Conetta, RBC, kait.conetta@rbc.com,
(212) 428-6409
Greg Hamrock, Hubbell Group,
ghamrock@hubbellgroup.com,
(781) 878-8882
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