Despite continuing gloomy economic conditions in the US, consumer confidence declined only slightly in November – slipping 2.3 points to 34.7, compared with 37.0 in October – on future? expectations that local economies will improve, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index.
Despite a sharp decline in energy prices, current consumer sentiment overall remains under siege because persistent negative forces such as the prolonged housing-market collapse, the growing credit crunch and the escalating job crisis scontinue to weigh on people’s minds.
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
RBC Expectations Index
The RBC Expectations Index contributed to the stability of overall Index numbers by increasing 18.2 points to 23.3 this month, compared with 5.1 in October.
Expectations regarding the health of the local economy improved in November as one-third of Americans (34%) believe their local economy will be stronger six months from now, compared to only 31% in October.
Similarly, the proportion of consumers who expect their local economy to be weaker in six months dropped from 27% last month to 24% in November. The 10% gap between “stronger” and “weaker” perceptions this month, compared to the four percent gap in October, contributed to the increase in the RBC Expectations Index for November.
RBC Jobs Index
Americans are the most pessimistic they have been about jobs since the inception of the RBC Jobs Index in January 2002, sending the RBC Jobs Index for November down to 74.0, compared with 78.8 last month.
Consumers’ jitters were fueled by an increase in job-loss experiences. This month, nearly half of Americans (48%) report having experienced job loss, either personally among those close to them, compared with 41% in October.
RBC Current Conditions Index
Driven by consumers’ worries about their current financial situation and an incremental downward shift in attitudes about the current strength of their local economy, the RBC Current Conditions Index dropped 12.4 points to 25.6, compared with 38.0 in October.
Currently, one-third (33%) of consumers view their current financial situations as weak – up from 29% in October – while only 21% view it as strong, down from 25% last month.
RBC Investment Index
Consumers’ discomfort with purchasing, investing and saving is driving down the RBC Investment Index. After dropping 12.2 points this month, it stands at 34.8, compared with 47.0 in October.
Americans are also more cautious regarding purchases. Seven out of 10 (71%) consumers report they are less confident in making a major purchase such as a home or car, compared to 69% last month.
“The overall RBC CASH Index continues to sag back toward the low established in July when sentiment was driven down by record energy prices. Although we have had a sharp decline in energy prices, consumer sentiment remains low as growing joblessness, the decline in the stock market and the ongoing housing market correction weigh on consumers’ minds,” said T.J. Marta, economic and fixed income strategist for RBC Capital Markets. One positive sign is that the expectations subcomponent has climbed, likely reflecting optimism over the presidential election, declining energy prices and the sweeping actions taken by the government to buoy the economy and financial system.”
About the data: 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 November 6 – 9, 2008, by survey-based research company Ipsos Public Affairs.