U.S. Consumer Confidence Rises: RBC Consumer Outlook Index
Americans Divided On How to Reduce National Deficit
NEW YORK, June 2, 2011 — Buoyed by a pause
in the increase of gas prices and a sense that the job market
is improving, U.S. consumer confidence has hit its highest
level since the beginning of the financial crisis in September
2008. As measured by the RBC Consumer Outlook Index, consumer
confidence rose to 46.7 for June, up 3.8 points from May's
42.9 reading.
"The rise in consumer confidence in June was broad-based,
with all of the key underlying metrics rising. This improvement
is likely a response to the sharp pullback in gasoline prices
over the last few weeks. That said, it's important to note
that even with this welcomed increase, confidence remains
below the historical average and is only slightly better than
the average for all of 2010," said RBC Capital Markets
Chief U.S. economist Tom Porcelli.
With the federal debt ceiling having been reached and Congress
focused on deficit reduction, Americans remain divided over
what course they want lawmakers to take. Although defense
and entitlements make up the largest part of the budget, only
one in four Americans (27 percent) want to see defense spending
reduced and 17 percent want to see Medicaid cut. Even fewer
want to cut Medicare (12 percent) or Social Security (10 percent).
Only one in five (18 percent) want to see tax increases as
part of a budget deal. Instead, 59 percent of Americans want
Congress to cut an unspecified group of "other government
programs."
"While most people recognize that the deficit is a significant
issue, it seems that few appreciate what really is required
to fix the problem. Few are willing to see entitlements, the
most problematic part of the deficit, scaled back. Instead,
most favor scaling back "other" government spending,
which accounts for a very small share of the deficit,"
said Porcelli. "The lack of willingness by voters to
take on these issues highlights the high hurdle for elected
officials to adopt the real and necessary reforms required
to get the deficit under control."
The RBC Consumer Outlook Index for June saw across-the-board
gains, with increases in all of the sub-indices. One of the
chief forces depressing consumer confidence - high fuel prices
- appears to have abated. After three months in which 90 percent
of consumers said that they expect fuel prices to increase,
only 75 percent of the consumers in the latest survey expect
fuel prices to rise.
This month's increase in the RBC Consumer Outlook Index is
driven partly by a stronger Current Conditions Sub-Index,
which rose nearly four points to 36.8, from 32.9 in May, its
highest since January 2010. While still low by historical
standards, this is the highest Current Conditions score observed
over the past year.
The strengthening of the Investments Sub-Index, which
improved 4.5 points to 41.0, up from 36.5 in May, also contributed
to the improvement in the overall Index. As with the Current
Conditions Sub-Index, June's Investments Sub-Index number
was the highest since January 2010. However, despite the stock
market's generally positive performance in recent months,
large numbers of consumers continue to believe that it is
a bad time (32 percent) to get into the market or are unsure
(52 percent).
The Jobs Sub-Index rose nearly four points to 54.7
this month, up from 50.8 in May, its highest level since January
2008. It is also the first time since 2008 that employment
confidence has been above the historical mean of 53.9.
The Consumer Expectations Sub-Index also rose this
month to 56.6, up 3.4 points from 53.2 in May, barely below
the 12-month high of 56.8 in February. Reflecting the growing
optimism, nearly four in 10 Americans (38 percent) say the
country is headed in the right direction, compared to 62 percent
who say it is on the wrong track. While hardly a ringing endorsement
of the country's condition, the "right direction"
number climbed 8 percent, up from 30 percent last month.
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
1,005 U.S. adults conducted May 27-30, 2011. 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:
Kait Conetta, RBC
Capital Markets, (212) 428-6409
Greg Hamrock,
Hubbell Group, (781) 878-8882
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