Sole Bright Spot Is Rise in Expectations for the Future, According to RBC
NEW YORK, Jan. 15 /CNW/ - Consumer sentiment reached a six-year low as
Americans continued to be rocked by increasing job losses, poor holiday
shopping season reports and the ongoing inability of the government and the
private sector to stabilize the economy, 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 13.3 for January 2009, down
slightly from 15.3 in December 2008. However, the continued slide in consumer
confidence is offset somewhat by an increase in expectations for the future,
just days before President-elect Obama is inaugurated.
"Consumer sentiment remains weighed down by concerns about the economy,
people's wealth in terms of their home equity and 401(k) values, and the
rising prospects of long-term unemployment," said T.J. Marta, Economic and
Fixed Income strategist for RBC Capital Markets. "Despite this downcast mood,
the tick higher in expectations suggests hope for the future under the new
administration, although the outlook is clearly cautious."
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
January 8-13, 2009, by survey-based research company Ipsos Public Affairs. The
margin of error was +/-3.1 per cent.
Highlights of the survey results include:
- With December unemployment hitting 7.2 per cent, the highest since
the early 1990s, the RBC Jobs Index saw an incremental drop of nearly
4 points in January to 61.8, compared to 65.6 last month, and a new
all-time low. Personal job loss experience has now touched more than
half of all Americans, with 53 per cent of consumers saying they or
someone in their close circle has lost their job in the past six
months due to the economy, up from 50 per cent last month.
- The RBC Expectations Index was the one bright spot, actually
improving in January to -11.3 from -21.2. Although still in negative
territory, the Index's improvement may signal rising hope for the
future. The improvement may be driven by Americans' openness to the
stimulus proposals coming out of Washington rather than any
expectation that local economies will improve quickly: Just 30 per
cent of survey respondents believe their local economy will be
stronger six months from now, up only slightly from 29 per cent last
- The RBC Current Conditions Index dropped to another all-time low in
January and currently stands at 8.7, compared to 16.5 last month.
Consumers increasingly are feeling the effects of the recession, with
over a third (37 per cent) saying their personal financial situation
is currently weak.
- Americans' overall opinions regarding investing dipped further this
month, setting another all-time low. The RBC Investment Index
currently stands at 22.5, down from 31.0 in December. Two-thirds of
American consumers (66 per cent) 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.
"Many consumers appear to be holding their breath to see what the new
administration will do to address the struggling economy," added Marta. "A
lack of decisive action or some quick results could negatively affect the
economic confidence of the American public, causing it to sink yet further."
The entire RBC CASH Index report can be viewed at:
For further information:
For further information: Loretta A. Healy, The Hubbell Group, Inc.,
(781) 878-8882; Kevin Foster, RBC, (212) 428-6902