Stock market volatility has had little effect on investment habits
NEW YORK, Sept. 1, 2011 /CNW/ - The volatility in the stock market
during the past month has had little impact on consumers' investment
patterns, but could potentially change consumers' spending habits,
according to the September RBC Consumer Outlook Index. Among those who
say they own stocks, bonds or mutual funds, 77 per cent say they have
made no changes to their holdings. Only a minority has acted, divided
evenly between those adding to their holdings (11 per cent) and those
selling assets (10 per cent), with only two per cent of respondents
selling all holdings. One-in-four Americans (26 per cent) plans to
reduce spending as a result of market volatility, while 69 per cent say
that it has had no impact.
"Despite the majority of Americans saying that the recent stock market
swoon will not impact their spending plans, the fact that over 25 per
cent of respondents say that they expect to spend less suggests a
consumer predisposed, in the aggregate, to rein in spending," said Tom
Porcelli, chief U.S. economist at RBC Capital Markets. "For those
respondents who own stock, the majority appear to be taking a wait and
see approach, which is generally consistent with the notion that retail
holders remain a bit more 'sticky.' On net, those adding or selling
some holdings were basically a wash, and the most dramatic response,
selling all holdings, was limited to the very few deciding to take such
Reflecting the nation's uncertain mood, U.S. consumer confidence
remained flat in September after dropping sharply earlier in the
summer, as measured by the RBC Consumer Outlook Index. According to the
Index, consumer confidence was essentially unchanged this month,
registering 40.2 for this month, compared to 40.1 in August.
"Confidence barely changed this month, holding near the low of the year,
as the news flow remained generally downbeat," said Porcelli. "In fact,
confidence has not moved meaningfully away from the post recession
lows, consistent with the fractured economic recovery that continues to
The leading positive indicator is the continued stability of employment.
While the overall Jobs Sub-Index score fell this month to 50.5 from 52.0 in August, actual experience
with job losses remains stable, standing at 37 per cent. Consumers are
increasingly anxious about job security. Currently, one-in-three
Americans (34 per cent) say that they are worried that they or someone
in their household will be laid off in the next six months, up from 31
per cent in August.
The Current Conditions Sub-Index also weakened slightly, declining to 28.2 from 28.8 in August. On a
positive note, the share of consumers who say that they are less comfortable making a major purchasing decision, such as a home or car,
than they were six months ago declined to 56 per cent, compared to 59
per cent last month.
The Expectations Sub-Index increased this month to 50.6, up 1.2 points from 49.4 in August. More
than a third of consumers (36 per cent) now expect the economy to
continue to worsen while just one-in-five (22 per cent) expect it to
The Investments Sub-Index improved marginally to 32.1, up 0.4 points from 31.7 in August. Despite
the recent stock market volatility, the number of Americans who think
the next 30 days will be a good time to invest in the stock market
improved to 22 per cent, up from 12 per cent in August.
After spiking briefly last month, gas prices have continued to decline,
and data from the RBC Index indicate that consumers are again feeling
some relief. The share of consumers expecting gas prices to rise in the
next year has dropped to 71 per cent, down from 82 per cent last month.
Price pressures are still apparent in other areas, with the number of
consumers expecting higher prices in food (79 per cent) and durable
goods (61 per cent) down only slightly from August.
Three-in-four Americans say that the U.S. is on the wrong track, which
is down a hair from 76 per cent in August. Only one-in-four Americans
(25 per cent) say the country is headed in the right direction.
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 1,000
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 1,009 U.S. adults conducted on August 25 to 28, 2011. 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
Loretta Healy, The Hubbell Group, Inc., email@example.com, (781) 878-8882