Although consumers’ hopes for their local economies and personal finances improved in the past month, the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index rose by only 2.5 points, to 40.0 in September 2009 – up from a 37.5 reading in August.
While the Index reached its highest level since May after a volatile summer, analysis of the results in each of the four sub-indices revealed that consumers are remaining cautious about economic recovery.
The sub-indices? measure consumers’ views of current conditions, their expectations for the future and their confidence in investing and job security.
Highlights of the survey results:
- After rebounding strongly in August, consumers’ expectations regarding future economic conditions continued to improve at a slower rate this month as the RBC Expectations Index for September 2009 climbed to 41.5, up 12.4 points to reach its highest level in 2009. Currently, 38% of consumers believe the economy in their community will be stronger in the next six months while 18% believe it will continue to weaken. Two months ago, consumers were split much more closely on this question, 31%/24%.
- Confidence in current conditions resumed a slight downward drift, with the RBC Current Conditions Index for September 2009 standing at 33.2, down 3.4 points from the August 36.6 reading. Vacations and back-to-school expenses contributed to a downturn in confidence in personal finances.
The percentage of consumers saying their personal financial situation is weak has increased to 37%? in September, from 32% last month. However, consumers are slightly more confident about their local economy than they were in August. Currently, only 42% say the local economy is weak, an improvement from 44% who said their local economy was weak last month.
- The RBC Investment Index slipped 7 points this month to 36.9 from a 43.9 level in August. Confidence in investing is shaky, with just 34 per cent of consumers saying that now is a good time to invest in the markets and 48% recommending investing in real estate. At the same time, the number of consumers who feel confident about investing for the future continues to improve, climbing to 31% this month, from 28% in August.
- Reported job loss continues to inch downward, and the RBC Jobs Index for September remains near its historic low, essentially holding steady at 53.5, up 0.3 points from the 53.2 observed in August. The most significant influence on confidence in job security continues to be personal experiences with job loss. Currently, 63% of consumers say they or someone in their close circle has lost a job in the last six months, a figure that hovers close to the peak job-loss rate of 65% observed from May to July.
“The top-line RBC Index continues to rise, but consumers clearly remain cautious,” said RBC Capital Markets US economist Tom Porcelli. “The headline received a boost from expectations about the future, but the here-and-now ‘current conditions’ index fell yet again. Given the strong relationship between the current conditions index and consumer spending, this is not an encouraging signal, as the rise in the overall RBC Index should be taken with a grain of salt.”
About the index: 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 US adults polled from August 27-31, 2009, by Ipsos Public Affairs.