NEW YORK, Oct. 8 /CNW/ - Propelled by diminishing concerns about current personal finances and job security, U.S. consumer sentiment reached a twelve-month high in October, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. Gains were made in every facet of consumer sentiment, with overall consumer confidence climbing 11.8 points. As a result, the RBC Index stands at 51.8 this month, compared to 40.0 in September. This marks a 50-point improvement over the all-time low of 1.6 observed in February 2009.
"Federal Reserve Chairman Ben Bernanke's assertion three weeks ago that the recession is over, together with a lack of negative financial news since then, have had a galvanizing effect on consumer sentiment," said RBC Capital Markets U.S. economist Tom Porcelli. "Although the trends are moving in the right direction, consumer confidence remains fragile, and unexpected bad news about the economy or markets could once again send sentiment spiraling downward."
The RBC 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 October 1-4, 2009, by survey-based research company Ipsos Public Affairs. The margin of error was +/-3.1 per cent.
Highlights of the survey results include:
- The RBC Investment Index increased sharply this month, climbing 21.1
points to 58.0 - the highest mark for the Investment Index this year.
Pessimism has declined significantly since mid-summer, with the
number of Americans who report they feel less confident in their
ability to make investments for the future dropping to 54 per cent,
down from 64 per cent in July. Consumers who feel confident about
investing for the future continued to improve, increasing to 33
per cent in October, from 31 per cent last month. Consumer comfort
levels for making major purchases, such as a car or new home, also
edged up, with 22 per cent of consumers reporting they are more
confident this month, compared to 19 per cent in September.
- Fueled by a drop in consumer pessimism, the RBC Current Conditions
Index also reached a twelve-month high in October as it climbed to
50.3, up 17.1 points from the September reading of 33.2. The
percentage of consumers saying their personal financial situation is
weak has dropped to 27 per cent in October from 37 per cent last
month. Americans' assessment of current local economic conditions
held steady this month, with 41 per cent of consumers saying their
local economy is currently weak, essentially the same rate as the 42
per cent observed in September.
- Consumers' near-term economic outlook brightened for the third
consecutive month, sending the RBC Expectations Index to 54.2, up
12.7 points from September's level of 41.5. Although consumers'
expectations for both their local economies and their personal
finances are essentially unchanged since last month, there is now
much less concern with impending job losses, resulting in the overall
Expectations Index improving. Currently, 36 per cent of consumers
believe the economy in their community will be stronger in the next
month, while only 16 per cent believe it will continue to weaken,
roughly the same split as in September.
- Americans remain guarded about the job market, as evidenced by the
slight increase in the RBC Jobs Index by 5.8 points in October to
59.3, well below the 78.8 level observed at this time one year ago.
The most significant influence on confidence in job security
continues to be real experiences in job loss. This month, 67 per cent
of Americans say they or someone in their close circle has lost a job
in the past six months, up from 63 per cent in September. Despite
ongoing job losses, relative confidence in personal job security also
continues to show signs of improvement. Nearly one-third (31 per
cent) of American consumers say that they feel more confident in
their job security now than they did six months ago, up from 28 per
cent in September. Correspondingly, the proportion of consumers who
are less confident in their personal job security is down to 58 per
cent in October after reaching a high of 71 per cent in March.
The RBC Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
For further information: For further information: Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882; Kait Conetta, RBC, (212) 428-6409