Declining Expectations for the Future Drive Drop in Confidence
NEW YORK, July 16 /PRNewswire-FirstCall/ -- Led by a dramatic decline in the expectations of U.S. consumers for the near future of the U.S. economy, the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index show a marked downward shift for July 2009, continuing the slide begun last month. The RBC CASH Index for July 2009 stands at 22.4, an 11.9 point decline from June's 34.3 reading.
"The RBC CASH Index for July confirms what we first saw last month: consumers are getting realistic. They're coming to grips with the idea that we will not see a quick economic turnaround but instead face a lengthy, drawn-out recovery," said RBC Capital Markets Managing Director Larry Miller. "Consumer confidence is resetting to the levels seen earlier this year and is likely to remain there until there is concrete evidence of a turnaround." 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 July 9-13, 2009, by survey-based research company Ipsos Public Affairs. The margin of error was +/-3.1 per cent.
Highlights of the survey results include: - Consumers' expectations regarding future economic conditions hit a
wall this month, as the RBC Expectations Index plunged sharply,
dropping 36.1 points to 4.8, compared to 40.9 in June. After four
consecutive months of rising hopes that the economy would turn around
in the next six months, the longest such increase in expectations
since the launch of the index in 2002, many Americans are coming to
grips with the idea that it may still be some time before things get
better. - Consumer confidence in current conditions has stabilized after a
dramatic drop last month, with the RBC Current Conditions Index for
July 2009 standing at 23.3, an insignificant decrease of 0.5 points
compared to June's 23.8. This stability follows a plunge of nearly 50
per cent last month, the largest single drop in the index since the
start of the recession. Analysis indicates that, prior to the drop in
last month's survey, current conditions were buoyed artificially by
soft gas prices and tax refunds. - The RBC Investment Index showed little movement this month, standing
at 30.9 for July 2009. This is a 3.5 point decrease from June's level
of 34.4. While most of the decrease in investment confidence stems
from consumers' weakening financial conditions, they also are less
comfortable with investing and major spending. Nearly two-thirds (64
per cent) of consumers say they are less confident now in their
ability to make investments for the future, including retirement and
education, than they were six months ago. Consumers' confidence in
the stock market also waned after the rollback in the equity markets
that began in mid-June. Currently, 68 per cent of consumers say it is
a bad time to invest in the stock market, compared to 63 per cent in
June. - Despite the unemployment rate reaching the highest level in 26 years,
the RBC Jobs Index for July saw a minor uptick to 50.5, up 3.8 points
from the 46.7 observed in June. The slight increase in confidence in
the job market comes alongside growing indications that the rate of
job loss is slowing. In July, 31 per cent of consumers say it is
likely that they or someone in their family or friends will lose
their job in the next six months. This is down from the 35 per cent
expressing job security concerns in June.
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 approximately 80,000 full- and part-time employees who serve more than 18 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 53 other countries. For more information, please visit http://www.rbc.com/. DATASOURCE: RBC Capital Markets CONTACT: Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882; Kevin Foster, RBC, (212) 428-6902
|