U.S. consumer confidence cooled this month as worries over every facet of their financial situation mounted, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. Economic attitudes soured across the board, with consumers viewing the current economy negatively and displaying increased pessimism about the future. As a result, the RBC Index for February 2010 stands at 39.4, down 18.9 points from January's 58.3 reading.
"Although numerous economic indicators are trending in a favorable direction, it's evident that 'less-bad' is just not good enough for U.S. consumers," said RBC Capital Markets U.S. economist Tom Porcelli. "This month's reading suggests that consumers continue to feel financial pressure from recent volatility in stocks and a soft job market."
The RBC 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 28 - February 1, 2010, by survey-based research company Ipsos Public Affairs. The margin of error was +/-3.1 percent.
Highlights of the survey results include:
- Confidence in current conditions deteriorated sharply during the past month, as seen in the RBC Current Conditions Index, which stands at 30.5, a dramatic decline from January's 51.6 level. The drop in the index is due to a significant weakening in consumers' evaluations of the state of their local economies as well as their pocketbooks. Currently, almost half of all Americans (46 percent) rate their local economy as weak, up from 40 percent in January. Consumers' unease with personal finances is reflected in lower confidence in making major purchases such as a house or car: two-thirds of Americans (65 percent) report they are less comfortable than they were six months ago, compared to 62 percent who were less comfortable in January.
- Americans' confidence in the future waned considerably as the RBC Expectations Index dropped nearly 20 points this month to 48.0, down from 67.6 in January. Consumers' near-term concerns about their local economies and personal finances are driving the downturn in the index. Currently, only one-third of Americans (34 percent) expect their local economy to be stronger six months from now, down from 38 percent last month. This month also found that 13 percent of Americans expect their personal finances to be weaker six months from now, compared to 11 percent in January.
- Although it fell less than the other sub-indices, the RBC Jobs Index saw a drop of 13 points in February to 54.9, compared to 67.9 last month. Two-thirds of Americans (67 percent) say they or someone in their close circle have lost their job in the past six months, up from 62 percent in January. In addition, fewer than one-third of consumers (29 percent) are confident they or someone in their circle will not lose their job in the next six months, down from 37 percent in January.
- Consumers' confidence in the investment climate also soured considerably this month, resulting in a 17.3-point drop in the RBC Investment Index to 40.8, compared to 58.1 in January. The slide stems primarily from decreased confidence in the ability to invest in the future. The number of consumers who say they are less confident investing for the future has risen to 57 percent, up from 54 percent last month.
The RBC Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.
