NEW YORK, September 1, 2011 The volatility in the stock market during the past month has had little impact on consumers' investment patterns, but could potentially change consumers' spending habits, according to the September RBC Consumer Outlook Index. Among those who say they own stocks, bonds or mutual funds, 77 per cent say they have made no changes to their holdings. Only a minority has acted, divided evenly between those adding to their holdings (11 per cent) and those selling assets (10 per cent), with only two per cent of respondents selling all holdings. One-in-four Americans (26 per cent) plans to reduce spending as a result of market volatility, while 69 per cent say that it has had no impact.
"Despite the majority of Americans saying that the recent stock market swoon will not impact their spending plans, the fact that over 25 per cent of respondents say that they expect to spend less suggests a consumer predisposed, in the aggregate, to rein in spending," said Tom Porcelli, chief U.S. economist at RBC Capital Markets. "For those respondents who own stock, the majority appear to be taking a wait and see approach, which is generally consistent with the notion that retail holders remain a bit more 'sticky.' On net, those adding or selling some holdings were basically a wash, and the most dramatic response, selling all holdings, was limited to the very few deciding to take such drastic action."
Reflecting the nation's uncertain mood, U.S. consumer confidence remained flat in September after dropping sharply earlier in the summer, as measured by the RBC Consumer Outlook Index. According to the Index, consumer confidence was essentially unchanged this month, registering 40.2 for this month, compared to 40.1 in August.
"Confidence barely changed this month, holding near the low of the year, as the news flow remained generally downbeat," said Porcelli. "In fact, confidence has not moved meaningfully away from the post recession lows, consistent with the fractured economic recovery that continues to prevail."
The leading positive indicator is the continued stability of employment. While the overall Jobs Sub-Index score fell this month to 50.5 from 52.0 in August, actual experience with job losses remains stable, standing at 37 per cent. Consumers are increasingly anxious about job security. Currently, one-in-three Americans (34 per cent) say that they are worried that they or someone in their household will be laid off in the next six months, up from 31 per cent in August.
The Current Conditions Sub-Index also weakened slightly, declining to 28.2 from 28.8 in August. On a positive note, the share of consumers who say that they are less comfortable making a major purchasing decision, such as a home or car, than they were six months ago declined to 56 per cent, compared to 59 per cent last month.
The Expectations Sub-Index increased this month to 50.6, up 1.2 points from 49.4 in August. More than a third of consumers (36 per cent) now expect the economy to continue to worsen while just one-in-five (22 per cent) expect it to improve.
The Investments Sub-Index improved marginally to 32.1, up 0.4 points from 31.7 in August. Despite the recent stock market volatility, the number of Americans who think the next 30 days will be a good time to invest in the stock market improved to 22 per cent, up from 12 per cent in August.
After spiking briefly last month, gas prices have continued to decline, and data from the RBC Index indicate that consumers are again feeling some relief. The share of consumers expecting gas prices to rise in the next year has dropped to 71 per cent, down from 82 per cent last month. Price pressures are still apparent in other areas, with the number of consumers expecting higher prices in food (79 per cent) and durable goods (61 per cent) down only slightly from August.
Three-in-four Americans say that the U.S. is on the wrong track, which is down a hair from 76 per cent in August. Only one-in-four Americans (25 per cent) say the country is headed in the right direction.
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 on August 25 to 28, 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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