U.S. Consumer Sentiment Sags in June But Expectations for the Future Improve, According to RBC CASH Index



    Decline in Consumer Confidence Ends Three-Month Rally

    NEW YORK, June 11 /CNW/ - Consumers' economic enthusiasm faded this month
as the jobless rate reached a 26-year high, gas pump prices climbed almost
daily and the initial fervor for the government's economic remedies waned,
according to the most recent results of the RBC CASH (Consumer Attitudes and
Spending by Household) Index. Led by a sharp drop in consumers' excitement
about current economic conditions, the RBC CASH Index for June 2009 stands at
34.3, an 8.7 point decline from May's 43.0 reading, but nearly 33 points above
the all-time low of 1.6 observed in February 2009.
    "The June reading of the RBC CASH Index suggest that consumers are
disappointed by the recent spate of bad news," said RBC Capital Markets
Managing Director, Larry Miller. "However, consumer expectations continue to
show improvement."
    Despite current financial woes, the report found that increasing numbers
of Americans are starting to believe the worst is behind them. Expectations
regarding personal economic security have held steady since May and consumer
pessimism also remains fairly low with only 14 per cent of Americans saying
they expect their personal financial situation to weaken over the next six
months.
    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
June 4-8, 2009, by survey-based research company Ipsos Public Affairs. The
margin of error was +/-3.1 per cent.

    
    Highlights of the survey results include:

    -   Increased prices at the pump, spent tax refunds, continued job losses
        and prolonged economic instability drove the RBC Current Conditions
        Index down nearly 50 per cent in June to a reading of 23.8, compared
        to 45 last month. This month's reading is the largest single drop in
        the index since the start of the recession and erases most of the
        gains posted in April and May. The decline in the index is primarily
        driven by a downshift in consumers' attitudes about the current
        strength of their local economy and their worries about their current
        financial situation. This month, 45 per cent of consumers view their
        local economy as weak, up from 39 per cent in May. Coinciding with
        the weak local economy, the share of consumers reporting that their
        personal finances are strong dropped to 19 per cent in June from 25
        per cent last month.

    -   Consumers' weakening financial conditions and their discomfort with
        investing and making major purchases also drove down the RBC
        Investment Index. After dropping 15.2 points this month, the index
        stands at 34.4, compared to 49.6 in May. More than six in ten
        Americans (61 per cent) report they are less confident in their
        ability to make investments for the future, including retirement and
        education, than they were six months ago (an increase from 59 per
        cent last month).

    -   With the unemployment rate reaching 9.4 per cent, the RBC Jobs Index
        slid to 46.7 in June, down from May's 54.4 level. The decline this
        month essentially erases the gains seen in May and may be a
        correction for a premature increase in confidence. Consumers'
        concerns were fed by increased pessimism about job security. This
        month, more than two in three Americans (67 per cent) say they are
        less confident about their personal job security now than they were
        six months ago, compared to 61 per cent in May.

    -   The RBC Expectations Index rebounded this month, increasing 6.9
        points to 40.9, compared to 34.0 in May. This is the first time
        consumer expectations have shown improvement over four consecutive
        months since the launch of the index in 2002. Consumer expectations
        regarding the health of the local economy improved slightly in June
        as 37 per cent said they believe their local economy will be stronger
        six months from now, compared to 36 per cent last month. In addition,
        the proportion of consumers who expect their local economy to be
        weaker in six months dropped to 18 per cent this month from 20 per
        cent in May.

    The entire RBC CASH Index report can be viewed at:
www.rbc.com/newsroom/rbc-cash-index.html.

    About RBC
    

    Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate
under the master brand name RBC. We are Canada's largest bank as measured by
assets and market capitalization, one of North America's leading diversified
financial services companies and among the largest banks in the world, as
measured by market capitalization. We provide personal and commercial banking,
wealth management services, insurance, corporate and investment banking and
transaction processing services on a global basis. We employ approximately
80,000 full- and part-time employees who serve more than 18 million personal,
business, public sector and institutional clients through offices in Canada,
the U.S. and 53 other countries. 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, (212) 428-6902


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