RBC CASH Index: Third Consecutive Monthly Increase In Consumer Confidence Signals Optimism For Future
The RBC CASH Index, which is derived from telephone interviews held with 1,000 individuals across the U.S. this week, stands at 85.5 for December. This is compared to 66.8 for October - and substantially above the yearly average of 78.7. Buoyed by continuing optimism in future economic conditions, the RBC Expectations Index for December now stands at 53.9, continuing a positive trend after expectations hit rock bottom in September, (when the RBC Expectations Index stood at -13.5). It is also above the yearly average of 40.0.
"There seems to be no stopping this economy and these results show that consumers as a whole are poised to spend, despite the hurricanes and high energy prices," said Vincent Boberski, director of Fixed Income Research for RBC Dain Rauscher. "This is shaping up to be one of the more solid holiday shopping seasons of recent years."
More good news for retailers is that four in ten respondents (40 per cent) report that they are more comfortable making household purchases (other than major purchases like a home or a car), an increase from the 35 per cent who reported similar purchasing confidence in October 2005.
This upswing in confidence regarding purchases, also contributed to an increase in the RBC Investment Index for December, which stands at 89.5, up from 82.8 in November. It shows that Americans are gaining confidence in their ability to invest in the future, including the ability to save money for retirement or their children's education. Currently, four in ten (40 per cent) say they are more confident in investing.
Americans' expectations for their local economies have also improved substantially. One quarter (26 per cent) expect the economy in their local area to be stronger six months from now. This is supported by a significant decrease in the number of Americans who feel their local economy will weaken over the next six months (16 per cent compared to 28 per cent in October 2005).
The RBC Current Conditions Index for December is holding steady at 92.8. However, despite the consistency of current consumer confidence, Americans' current financial situations continue to be a source of worry. Compared to September 2005 -- when nearly three in ten rated their current financial situation as strong -- currently only 25 per cent rate their financial situation as such. As well, 29 per cent rate the strength of their current local economy as weak, compared to only one quarter reporting a weak rating in October 2005. So for now, expectations for the next six months offset current pessimism, and this effect does not appear to impact other facets of economic confidence.
"Looking ahead to 2006, continued strong gains in the labor market should keep the upward momentum on track -- especially as rebuilding along the Gulf Coast gets into full swing during the first half of the year," said Boberski. "While threats to economic expansion still lurk on the horizon, not least of which are accelerating inflation and the Fed's response through still- higher interest rates, those look a long way off to shoppers rushing home with their treasures."
The RBC Jobs Index experienced a slight downturn as it stands at 116.5 for December, a slight decrease from 119.8 in November. Despite this slight decrease in job-related confidence, seven in ten (69 per cent) report no direct job loss experience in the past six months and 52 percent report a low likelihood that they personally, or someone they know, will lose their job in the next six months due to economic conditions.
RBC's Consumer Attitudes and Spending by Household Index is a monthly national survey of consumer attitudes on the current and future state of local economies, personal financial situations, savings, and confidence to make large investments. The Index is benchmarked to the 100 reading assigned in January 2002 when it was first introduced. This month's findings are based on a representative sample of 1,000 adults polled nationwide from November 7 through November 9, 2005, by survey-based research company Ipsos Public Affairs.
For more information on this press release, please contact: Brian R. Scanlon Ipsos Public Affairs Washington, DC 202.463.2146
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