RBC CASH Index: Consumer Confidence Continues Its Slump As Financial Worries Mount
Economic attitudes soured across the board, with consumers viewing the current economy negatively and displaying deep pessimism about the future. As a result, the overall RBC CASH Index for June 2008, released today by RBC, stands at an all-time low of 22.5, dropping nearly 17 points below May's 39.0 level.
"After improving in May, the RBC CASH Index has resumed the downward trend that has persisted for most of the past 12 months, as the overall index and each sub-index fell, and all but the expectations sub-index fell to a new record low," said T. J. Marta, Economic and Fixed Income Strategist for RBC Capital Markets. "Despite economic stimulus checks being sent to millions of Americans, this month's reading indicates consumers are under extreme and growing financial pressure from falling housing prices, rising food and energy prices and a softening job market."
The RBC CASH Index is a monthly national survey of consumer attitudes on the current and future state of local economies, personal finance situations, savings and confidence to make large investments. The Index is composed of four sub-indices: RBC Current Conditions Index; RBC Expectations Index; RBC Investment Index; and, RBC Jobs Index. The Index is benchmarked to a baseline of 100 assigned at its introduction in January 2002. This month's findings are based on a representative nationwide sample of 1,000 U.S. adults polled from May 29 - June 2, 2008, by survey-based research company Ipsos Public Affairs. The margin of error was plus or minus 3.1 per cent.
Highlights of the survey results include:
- Americans' economic outlook dropped sharply during the past month, as seen in the RBC Expectations Index, which fell nearly 20 points to -43.9, compared to -24.1 in May. Consumer expectations have now been in negative territory (compared to the benchmark of 100, set in January 2002) for the past six months, and show few signs of improving any time soon. The downturn in the index is being driven by consumers' expectations that the economy as a whole will be weaker six months from now. More than one-third of Americans (36 per cent) believe that their local economy will weaken in the coming months; currently, only one in five consumers (22 per cent) believe their local economy will be stronger six months from now. The only bright spot is that consumers' expectations about their personal finances show signs of stabilizing. Currently, 31 per cent of consumers report they believe their personal finances will be stronger in six months, compared to 26 per cent in August.
- The RBC Current Conditions Index slid nearly 17 points in June, down to 40.5, compared to 57.4 last month. Although Americans' perceptions of the current local economic conditions held steady, ratings of current personal finances declined with fewer than one-quarter (23 per cent) of consumers rating their current financial situation as strong, compared to 30 per cent in May. Consumers' comfort level for making household purchases also held steady this month, although overall confidence remains low. Twenty-two per cent of Americans said they were more confident making a major purchase than they were six months ago, up from 19 per cent in May.
- The RBC Jobs Index is down nearly seven points to 87.3, its lowest level since inception in January 2002. While overall perceptions of job security held steady in June at 29 per cent, declining confidence in employment is driven by increased personal job loss experience, and a reduction in perceptions that job loss experience in the next six months is unlikely. Personal job loss experience in June increased by four points, with 43 per cent of consumers reporting job loss in their immediate circle, compared to 39 per cent in May. And, only 40 per cent of consumers said it is unlikely that they or someone they know will lose their job in the next six months, compared 44 per cent last month.
- Consumers' confidence in the investment climate also soured considerably this month, resulting in more than a 15 point drop in the RBC Investment Index to 45.1 compared to 60.7 in May. The number of consumers reporting they are less confident in investing remained statistically unchanged at 60 per cent. The drop in confidence regarding investment has been trending up, with June's level representing a 12-point increase from January, and a 22-point increase from one year ago. And, although housing prices continue to drop, only 33 per cent of consumers believe the next month will be a good time to buy real estate, down from 37 per cent in May.
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html
For more information on this press release, please contact: Michael Gross, Ph.D. Associate Vice President Ipsos Public Affairs Washington, DC (202) 463-2147 [email protected]About Ipsos Public Affairs Ipsos Public Affairs is a non-partisan, objective, survey-based research practice made up of seasoned professionals. We conduct strategic research initiatives for a diverse number of American and international organizations, based not only on public opinion research, but elite stakeholder, corporate, and media opinion research.
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