NEW YORK, Sept. 14 /CNW/ - Subprime worries, softening job markets,
rising gas prices and an unstable stock market have taken a serious toll on
consumer sentiment, according to the most recent results of the RBC CASH
(Consumer Attitudes and Spending by Household) Index, which measured the
attitudes of 1,000 Americans earlier this week. Consumer confidence tumbled
across the board, reaching the lowest level since May 2006, as Americans view
the current economy negatively and display growing pessimism about the future.
As a result, the overall RBC CASH Index, released today by RBC, stands at 71.1
for September 2007, more than 18 points below August's 89.3 level.
"The magnitude in the drop of consumer confidence is not surprising given
the rocky economic ride consumers are experiencing," said T. J. Marta,
Economic and Fixed Income Strategist for RBC Capital Markets. "Americans have
a dim view of their current financial situation and an even bleaker view of
their future prospects. Although some of the factors weighing on consumers
could dissipate in coming weeks, the decline in confidence is consistent with
our view that U.S. economic growth will moderate through the remainder of the
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
September 10-12, 2007, by survey-based research company Ipsos Public Affairs.
The margin of error was plus or minus 3.1 per cent.
Highlights of the survey results include:
- Consumers' economic outlook dropped sharply during the past month, as
seen in the RBC Expectations Index, which declined nearly 30 points
to 14.4 compared to 43.9 in August. Expectations about job loss grew
gloomier as only 49 per cent of consumers reported that it is
unlikely they or someone they know will lose their job in the next
six months, down from 56 per cent last month. Worries over prospects
for the local economy also increased, with 23 per cent of Americans
expecting their local economy to be weaker in six months, compared to
17 per cent in August. The only bright spot is that consumers'
expectations about their personal finances held steady. More than
one-third (36 per cent) reported they believe their personal finances
will be stronger in six months, compared to 35 per cent in August.
- Increased pessimism about job security combined with more personal
job loss drove the RBC Jobs Index down nearly 11 points to 113.6, its
lowest level of 2007. Forty-five per cent of Americans reported
feeling less confident about their job security, up five points from
last month. Personal job loss experience in September increased by
3 points, with 33 per cent of consumers reporting job loss in their
immediate circle compared to 30 per cent in August.
- The RBC Current Conditions Index slid more than 15 points in
September, down to 90.5, compared to 105.6 in August. Negative views
of the current state of the economy outweigh positive views, with one
in three Americans (31 per cent) rating their local economy as weak,
considerably more than the 19 per cent who rate their local economy
as strong. Consumers' comfort level for making household purchases
fell to 35 per cent in September from 37 per cent last month, and
ratings of current personal finances also declined, with 27 per cent
of Americans rating their current financial situation as weak,
compared to 23 per cent in August.
- As consumers' views of both the current economy and their future
prospects darken, they are less confident of their ability to make
investments or major purchases. The RBC Investment Index declined
almost 10 points to 88.3 this month, compared to 97.9 in August.
Consumers' investment confidence declined on all measures with the
largest decline coming from confidence in investing for the future.
In September, 44 per cent of Americans reported they are less
confident in their ability to invest in the future, compared to only
37 per cent in August.
The entire RBC CASH Index report can be viewed at:
RBC (RY on TSX and NYSE) is Canada's largest bank as measured by assets
and market capitalization and one of North America's leading diversified
financial services companies. In the United States, RBC provides personal and
commercial banking, wealth management, insurance, corporate and investment
banking and transaction processing services to about two million clients
through RBC Centura, RBC Insurance, RBC Liberty Insurance, RBC Dain Rauscher
and RBC Capital Markets. The company employs approximately 70,000 full- and
part-time employees who serve more than 15 million personal, business, public
sector and institutional clients throughout offices in North America and
34 countries around the world. For more information, please visit www.rbc.com.
For further information:
For further information: Loretta A. Healy, The Hubbell Group, Inc.,
(781) 878-8882; Kevin Foster, RBC Capital Markets, (212) 428-6902