U.S. Consumer Confidence Sags as Fuel Price Worries Mount:
RBC Consumer Outlook Index
Half of Americans Have Cut Back or Cancelled Vacation Plans
Due to High Gas Prices
NEW YORK, May 5, 2011 — With the summer
vacation season fast approaching, almost half of Americans
(47 per cent) say they have already cut back or cancelled
vacation plans due to high gas prices and 20 per cent have
scaled back their plans because of high air fares, according
to this month's RBC Consumer Outlook Index. The Index for
May fell to 42.9, down 1.9 points from April's 44.8 reading.
Soaring gas prices have already caused three-in-10 consumers
to reduce their discretionary spending, according to the survey.
With the current average price per gallon of gas at $3.90
nationally when this poll was conducted from April 28-May
1*, another 41 per cent said they would reduce spending when
gas prices climbed above $4.50 per gallon and one-in-five
said their pain threshold was $5.00 per gallon or more. Asked
the same question in March, when the average price for gas
was about $3.20 per gallon, half of consumers (50 per cent)
reported that their threshold for scaling back spending was
below $4.00 per gallon and 20 per cent said it was $4.50 per
gallon.
"With gasoline price increases showing little sign of
abating, this month we asked once again how this impacts discretionary
spending," said Tom Porcelli, chief US economist at RBC
Capital Markets. "The results highlight the psychological
element involved with rising gasoline prices, as people revise
their pain threshold according to the reality of what is happening
at the pump. This suggests that, despite what is likely to
be a continued drift higher in gasoline prices given supply
and demand dynamics, spending is very likely to hold up."
This month's decline in the RBC Consumer Outlook Index is
driven by all four sub-indices. The Expectations Sub-Index declined to 53.2, down 1.3 points, reaching
the lowest point this year, and the Current
Conditions Sub-Index, declined three points to 32.9 from
35.9 in April. Seven-in-10 Americans say the country is on
the wrong track, compared to 30 per cent who say it is headed
in the right direction. The "wrong track" number
is at the highest level observed since 2009.
The Investments
Sub-Index dropped three points to 36.5 this month. Despite
the generally positive performance of the stock market during
the past few months, 34 per cent of consumers believe that
it is a bad time to invest in the market and 50 per cent are
unsure about investing in the market.
Although the Jobs
Sub-Index edged down one point to 50.8 this month, overall
employment confidence remains stronger than observed throughout
2010. Only 28 per cent of Americans say that someone in their
immediate circle is currently worried about losing a job and
just four-in-10 (40 per cent) report that someone in their
immediate circle has lost a job in the past six months, basically
unchanged from April.
"Consumer confidence remains fragile, as evidenced by
the broad-based decline in the RBC Consumer Outlook Index
- indeed, all sub-indices posted declines this month,"
added Porcelli. "But what a consumer says can sometimes
be at odds with what a consumer does. Confidence fell, but
weekly measures of consumer spending remain fairly buoyant
and, from our perspective, the second quarter is looking very
much like the first quarter. In other words, consumption is
not losing momentum."
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
1,011 U.S. adults conducted April 28 - May 1, 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.
* The survey was completed immediately before the news
on Osama bin Laden, and therefore does not reflect the impact
of that news.
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Contacts:
Kait Conetta, RBC
Capital Markets, (212) 428-6409
Greg Hamrock,
Hubbell Group, (781) 878-8882
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