Consumers expect to spend most of the Social Security tax cut
NEW YORK, Jan. 6 /CNW/ - Raising hopes for higher consumer spending over
the course of 2011, nearly three-quarters of Americans (74 percent)
plan to spend at least some of the extra money they will receive
through the one-year Social Security payroll-tax reduction that became
effective January 1, 2011, including 42 percent who expect to spend all
or most of it, according to the monthly RBC Consumer Outlook
Index. Only one-in-four Americans (26 percent) said they plan to save
all of their extra take-home pay from the tax cut.
Consumer confidence in January as measured by the RBC Consumer Outlook
Index is at 44.9, hovering just below last month's 45.2 level, the
post-recession peak. The slight dip in the overall Index was countered
by continued gains in employment confidence, with the RBC Consumer
Outlook Jobs sub-index edging up to 52.1 from 51.8 in December and up
10 points (24 percent) from a year ago when it sat at 42.0.
"After rising for three straight months, confidence has taken a little
breather here in January," said RBC Capital Markets Chief U.S.
economist Tom Porcelli. "But even with the modest pullback, we are
still seeing a better backdrop of consumer confidence as we start the
New Year. The jobs measure bucked the broader trend and posted a
surprising rise - even in the face of weaker overall confidence and an
unemployment rate that rose in December."
Additionally, pessimism about respondents' local economies is at the
lowest level seen in more than a year. Fewer than half (47 percent) of
consumers currently rate their local economy as weak, down from 51
percent last month and 59 percent in September 2010.
The findings from the new survey were not uniformly positive. While the
Jobs sub-index improved this month, the other sub-indexes all eased
somewhat. The Current Conditions sub-index ticked down to 35.0, from
35.6 last month. The Expectations sub-index decreased to 55.3, from
56.1 last month. The Investment sub-index slipped to 38.9, from 40.0
Nearly two-thirds of Americans (64 percent) said the country was on the
wrong track, compared to 36 percent who said it was headed in the right
direction. The "wrong track" number was up from 61 percent last month
and remained above the 60 percent level for the ninth consecutive
Other survey findings support the notion that Americans remain wary
about the overall direction of the economy. Almost as many of the
survey respondents believe the country's economy will worsen in the
next year (24 percent) as those who believe it will get better (28
percent), and nearly half (48 percent) think that the nation will
continue struggling along in much the same condition as in the recent
"The consumer is right to be cautious," said Porcelli. "The recently
enacted tax legislation will certainly provide a boost to spending over
the course of the year, but we remain in an environment where job
growth is modest, home prices are stagnant at best and access to credit
remains limited. The bottom line is the path back to more normal levels
of confidence will not be a straight line."
With gift cards a popular holiday present, survey respondents were asked
how quickly they expect to use any gift cards they receive. Half of the
respondents (52 percent) expected to use any cards received within a
month, and three-quarters (73 percent) within three months. Notably,
one-in-seven respondents (16 percent) either has no plans to use their
gift cards or "often forgets about them."
About The RBC Consumer Outlook Index
The RBC U.S. Consumer Outlook Index provides the most up-to-date and
comprehensive outlook of U.S. consumers based on data collected from
interviews with a nationally representative sample of more than 1,007
U.S. adults conducted over a multi-day polling period each month by
Ipsos, the world's second-largest market and opinion research firm. The
results in this news release reflect some of the findings of the Ipsos
poll of 1,007 U.S. adults conducted December 27-30, 2010. The RBC
Consumer Outlook Index is released within 36 hours after the U.S.
online panel members are interviewed. Weighting is employed to balance
demographics and ensure that the survey sample's composition reflects
that of the U.S. adult population according to Census data and to
provide results intended to approximate the sample universe.
For further information:
Kait Conetta, RBC Capital Markets, firstname.lastname@example.org, (212) 428-6409
Greg Hamrock, Hubbell Group, email@example.com, (781) 878-8882