U.S. consumer confidence experiences largest single month decline, as Americans' expectations for the future plummet according to RBC CASH Index



    NEW YORK, Oct. 9 /CNW/ - The implosion of Wall Street and the spreading
economic crisis have taken a heavy toll on consumers, driving their confidence
back down after a brief rally the past two months. According to the most
recent results of the RBC CASH (Consumer Attitudes and Spending by Household)
Index, consumer confidence dropped 32 points in October - the largest
single-month decline in overall sentiment since the Index began in January
2002. The RBC CASH Index currently stands at 37.0 compared to 69.2 in
September, driven down by the sharp decline in consumers' economic
expectations.
    "The dramatic upswing in consumer sentiment last month stemming from
declining energy prices has reversed just as suddenly. In the past month,
Americans have been confronted by a worsening global credit crisis, a
plummeting stock market, rising unemployment and continued housing price
declines," said T.J. Marta, Economic and Fixed Income strategist for RBC
Capital Markets. "We may be entering a period of manic-depression for
consumers, with mood swings dictated by the latest good or bad news."
    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
October 2 - 6, 2008, by survey-based research company Ipsos Public Affairs.
The margin of error was +/-3.1 per cent.

    
    Highlights of the survey results include:

    -   Consumers' economic outlook deteriorated sharply during the past
        month, as seen in the RBC Expectations Index, which stands at 5.1, a
        dramatic drop from September's 76.3 level. Although still relatively
        low, the proportion of Americans who think their personal financial
        situation will weaken over the next six months doubled this month,
        reaching 14 per cent, compared to 7 per cent in September. The shift
        in the Index, however, was mainly due to consumers' increased
        pessimism about their local economy. This month, more than
        one-quarter of consumers (27 per cent) believe their local economy
        will be weaker six months from now, compared to 13 per cent last
        month. Recent experience demonstrates that attitudes regarding the
        future are more volatile and subject to events-based swings. And
        although many consumers have not yet felt additional pressure
        stemming from the Wall Street meltdown, the climate of "doom and
        gloom" is significant enough to produce a substantial decrease in the
        RBC Expectations Index for October and drive the overall RBC CASH
        Index in a negative direction.

    -   Shell-shocked consumers also are clearly uncomfortable with current
        economic conditions, as evidenced by the 17.2 drop in the RBC Current
        Conditions Index to 38.0, compared to 55.2 in September. The decline
        in the index is primarily driven by a drop in Americans' comfort
        level for making major purchases or investments, and in their
        feelings about job security. Sixty-nine per cent of consumers said
        they were less comfortable making a major purchase than they were six
        months ago, up from 55 per cent in September. The one bright spot is
        that Americans' perceptions of their personal financial situations
        improved slightly in October, continuing the slow up tick observed
        since June's lows. Currently, 29 per cent of consumers view the
        current financial situations as weak, down from 33 per cent in
        September.

    -   A clear indication of the depth of consumers' economic woes is the
        17 point drop in the RBC Jobs Index to 78.8, an all-time low for the
        RBC Jobs Index since it began in January 2002. Americans' confidence
        regarding overall job security declined this month, and expectations
        about personal job loss experience increased. The proportion of
        Americans who are more confident about their job security now than
        they were six months ago dropped to 23 per cent, compared to
        30 per cent in September. In addition, the share of consumers who
        said that it is likely that someone in their immediate circle will
        lose their job in the next six months increased to 28 per cent in
        October, compared to 23 per cent last month. And the number of
        consumers who are confident that someone close to them will not lose
        a job in the next month declined significantly to 35 per cent from
        46 per cent in September.

    -   Many Americans watched the value of their investments evaporate this
        month, sending the RBC Investment Index to a reading of 47.0, down
        from 63.8 in September. More than six in ten Americans (62 per cent)
        report they are less confident in their ability to save and invest
        this month, compared to 51 per cent in September.
    

    The entire RBC CASH 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


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