But Four in Ten Consumers Say Country Is Now on the Right Track
NEW YORK, Feb. 12 /PRNewswire-FirstCall/ -- Continuing a year-long decline, U.S. consumer sentiment hit new all-time lows in February on news of accelerating joblessness, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. As a result, the overall RBC CASH Index stands at 1.6 for February 2009, down from 13.3 in January. This is the first time in the seven-year history of the Index that it has dropped into the single digits.
"The continued decline of consumer confidence comes in the face of rising unemployment and reports of big layoffs by major employers," said Marc Harris, co-head of Global Research, RBC Capital Markets. "The bright side is that, just weeks after President Obama's inauguration, four in ten consumers say that the country is now on the right track, a sharp turnaround from the past year. However, presidential honeymoons are shorter these days, and consumers are likely to expect the new administration to quickly show it is in command and has a plan to turn things around." 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 February 5-9, 2009, by survey-based research company Ipsos Public Affairs. The margin of error was +/-3.1 per cent.
Highlights of the survey results include: - With almost 600,000 Americans losing their jobs in January and
unemployment climbing to 7.6 per cent, the RBC Jobs Index saw a drop
of nearly 20 points in February to 42.3, compared to 61.8 last month. The February number was the largest single-month decline since the
Index was introduced, and the fifth straight month in which this
index has hit a new low. Declines in job security follow real
experiences in job loss: More than three in five Americans
(62 per cent) say they or someone in their close circle have lost
their job in the past six months, up from 53 per cent last month.
- Showing the effects of growing anxiety over job losses, the RBC
Expectations Index declined to -28.1 in February from -11.3 in
January. There is a bright spot: The number of Americans who say that
the country is on the right track jumped to 42 per cent in February
from the 20s and low 30s, where it had been mired for most of the
last year.
- The RBC Current Conditions Index dropped to another all-time low in
February and currently stands at 1.6, compared to 8.7 last month. This is the fourth consecutive month in which this index has hit a
new all-time low. Consumers are increasingly feeling the effects of
the recession, with two in five (39 per cent) saying their personal
financial situation is currently weak and two-thirds (67 per cent)
saying they now are less comfortable making household purchases than
they were six months ago.
- The RBC Investment Index currently stands at 17.6, down from 22.5 in
January. This index has also declined to an all-time low for the
fourth consecutive month. Two-thirds (66 per cent) of consumers
continue to say they are less confident now than they were six months
ago in their ability to make investments for the future, and
70 per cent think it is a bad time to invest in the stock market.
"Consumer confidence and economic recovery are in a chicken-and-the-egg situation. The economy can't begin to recover without people spending and investing. Yet without signs of recovery, consumers and investors will stay on the sidelines," added Harris.
The entire RBC CASH Index report can be viewed at: http://www.rbc.com/newsroom/rbc-cash-index.html.
Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under the master brand name RBC. We are Canada's largest bank as measured by assets and market capitalization, one of North America's leading diversified financial services companies and among the largest banks in the world, as measured by market capitalization. We provide personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis. We employ more than 80,000 full- and part-time employees who serve more than 17 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 48 other countries. For more information, please visit http://www.rbc.com/. DATASOURCE: RBC CONTACT: Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882; Kevin Foster, RBC Capital Markets, (212) 428-6902
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