U.S. consumer confidence continues to erode, according to RBC CASH Index

Although sunny summer days have arrived, Americans are feeling gloomy about current and future economic conditions, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index, which measured the attitudes of 1,004 Americans earlier this week. Economic attitudes weakened across the board, with consumers viewing the current economy negatively and displaying growing pessimism about the future. As a result, the overall RBC CASH Index, released today by RBC, stands at 76.1 for July 2007, more than five points below June’s 81.4 level.

“Consumer confidence fell for the second consecutive month, reaching its lowest level since last August,” said T. J. Marta, Economic and Fixed Income Strategist for RBC Capital Markets. “The drop in consumer confidence appears to be driven by new concerns about the jobs market and a weaker investment outlook due to the failure of the stock market to achieve new highs during June.”

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 1,004 U.S. adults polled from July 9 -11, 2007, by survey-based research company Ipsos Public Affairs. The margin of error was plus or minus 3.1 per cent.

Highlights of the survey results include:

Americans’ pessimism about the economy now includes concerns about job losses and job security. In July, the RBC Job Index reached its lowest level in more than a year, dropping over 10 points to 116.8, compared to 126.9 in June. Personal job loss experience in July increased by 6 points, with 34 per cent of consumers reporting job loss in their immediate circle compared to 28 per cent in June. Expectations regarding future job loss also increased, with nearly one in five (18 per cent) Americans reporting future job loss is likely in the next six months, compared to 14 per cent in June.


Consumers’ confidence in the investment climate cooled only slightly this month, compared to the dramatic 20 point drop experienced in June. The RBC Investment Index dropped less than three points, and stands at 83.6, down from 86.1. Americans reported a small dip in their confidence in the ability to save and invest in the future with 40 per cent reporting greater confidence this month, compared to 42 per cent in June.


Expectations regarding future economic conditions also declined in July. The RBC Expectations Index hit its lowest level for the year, dropping nine points to 23.1, from its 32.2 level in June. Anxiety over prospects for the local economy increased, with 22 per cent of consumers expecting the local economy to be weaker in six months, compared to 18 per cent last month. Opinions regarding expectations for personal finances also soured, with 33 per cent of those polled reporting they believe their personal finances will be stronger six months from now, down from 36 per cent in June.


The RBC Current Conditions Index dipped slightly in July to 95.8, compared to 96.8 in June. Americans’ assessments of current local economic conditions dropped this month, with 20 per cent rating their local economy as strong, compared to 25 per cent last month. Consumers’ comfort level for making household purchases fell from 40 per cent in June to 36 per cent this month, while ratings of current personal finances held steady in July with slightly less than one quarter of consumers (24 per cent) rating their current financial situation as strong, compared to 23 per cent in June.
The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.