U.S. consumer sentiment improves, driven by strong increase in expectations for the future according to RBC CASH Index



    NEW YORK, Sept. 11 /CNW/ - Although the calendar indicates the end of
summer is quickly approaching, it appears consumer confidence may be heating
up, according to the most recent results of the RBC CASH (Consumer Attitudes
and Spending by Household) Index, which advanced for the second consecutive
month. Overall consumer confidence climbed 35 points to stand at 69.2,
compared to 33.8 in August. This month's RBC CASH Index was buoyed by an 81
point increase in Americans' expectations for the future. Gains also were made
in every other facet of consumer sentiment, including assessments of current
conditions, investing and job security.
    "The dramatic rebound in consumer sentiment this month is as startling as
some of the developments in recent weeks," said T.J. Marta, Economic and Fixed
Income Strategist for RBC Capital Markets. "The prices of oil and gasoline are
down 30 per cent and 12 per cent, respectively, from their peaks in July. The
bailouts of Fannie Mae and Freddie Mac announced during the polling period
represent a sweeping and historic move, which many hope will significantly
mitigate the housing correction. In addition, this month's survey occurred
immediately after the Republican convention and just a week following the
Democratic convention, both of which have generated hope for change in
Washington."
    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 1,044 U.S. adults polled from
September 5 - 9, 2008, by survey-based research company Ipsos Public Affairs.
The margin of error was +/-3.1 per cent.

    
    Highlights of the survey results include:

    -   Advancing out of negative territory for the first time in 2008, the
        RBC Expectations Index rose to 76.3 from its -4.7 reading in August.
        The shift in the index, which signals a much more optimistic
        assessment that economic conditions will begin to improve soon, is
        due largely to an improvement in Americans' expectations for personal
        finances and their local economy. This month, nearly four in ten
        consumers (38 per cent) believe their personal financial situation
        will be stronger six months from now (compared to 29 per cent in
        August). In addition, one-third of Americans (34 per cent) believe
        their local economy will be stronger six months from now (compared to
        23 per cent last month). Past experience demonstrates that attitudes
        regarding the future are more volatile and subject to events-based
        swings. This suggests that the expectations results should be viewed
        with some degree of caution. However, the strength of the positive
        shifts in the August and September results reinforce the claim that
        attitudes are moving toward a more optimistic position.

    -   The RBC Current Conditions Index improved markedly in September to
        55.2, compared to 36.7 in August. Americans' assessments of current
        local economic conditions rose this month with 14 per cent rating
        their local economy as strong, compared to 10 per cent last month. In
        contrast, ratings of current personal finances held steady in
        September, with one in four consumers (25 per cent) rating their
        current financial situation as strong, compared to 23 per cent in
        August.

    -   Consumers' confidence in the investment climate also climbed this
        month sending the RBC Investment Index to a reading of 63.8, up from
        42.6 in August. Thirty-one per cent of consumers reported they are
        more confident in their ability to invest, compared to 25 per cent
        last month. Americans' attitudes regarding both stock and real estate
        investments also showed slight gains in September. One-third of
        consumers (33 per cent) believe the next 30 days will be a good time
        to invest in the stock market, compared to 28 per cent in August.
        More than four in ten consumers (44 per cent) believe the next month
        will be a good time to buy real estate, versus 41 per cent last
        month.

    -   Although other facets of the economy are beginning to show
        improvement, consumers are still somewhat guarded about the job
        market, as evidenced by the increase in the RBC Jobs Index by only
        9.7 points in September to 95.5, compared to 85.8 last month.
        Americans' confidence regarding overall job security improved this
        month, while expectations about personal job loss experience held
        steady. This month, the share of consumers who say it is likely that
        someone close to them will lose their job in the next six months held
        steady at 23 per cent, compared to 25 per cent in August. In
        addition, 43 per cent of Americans reported job loss in their
        immediate circle, compared to 41 per cent in August.
    

    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; Kevin Foster, RBC Capital Markets, (212) 428-6902


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