| |
Consumer confidence continues its slump as financial worries
mount, according to RBC CASH Index
Consumer confidence drops across the board reaching new
low
NEW YORK, June 5, 2008 — U.S. consumer confidence
eroded this month as Americans' worries over every facet of
their financial situation mounted, according to the most recent
results of the RBC CASH (Consumer Attitudes and Spending by
Household) Index. 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.
- 30 -
Contacts:
Loretta A. Healy,
The Hubbell Group, Inc., (781) 878-8882
Kevin Foster,
RBC Capital Markets, (212) 428-6902
|
|
