News of accelerating joblessness sent consumer confidence hurtling to an all-time low this month, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index, which indicate that the Index has fallen to 1.6 in February 2009, from 13.3 in January.
February’s numbers mark the first time in the seven-year history of the Index that it has dropped into the single digits. However, the research also shows that four in ten consumers believe the US is now on the right track, a sharp turnaround from the past year, according to RBC.
Highlights from the Index’s individual components:
- With almost 600,000 Americans losing their jobs in January and unemployment climbing to 7.6%, the RBC Jobs Index saw a drop of nearly 20 points in February to 42.3, compared with 61.8 last month. The February number was the largest single-month decline since the Index was introduced, and the fifth straight month in which this index has hit a new low. Declines in job security follow real experiences in job loss: More than three in five Americans (62%) say they or someone in their close circle have lost their job in the past six months, up from 53% last month.
- Showing the effects of growing anxiety over job losses, the RBC Expectations Index declined to -28.1 in February from -11.3 in January. The one bright spot: The number of Americans who say that the country is on the right track jumped to 42% in February from the 20s and low 30s, where it had been mired for most of the last year.
- The RBC Current Conditions Index dropped to an all-time low in February and currently stands at 1.6, compared with 8.7 last month. This is the fourth consecutive month in which this index has hit a new all-time low. Consumers are increasingly feeling the effects of the recession, with two in five (39%) saying their personal financial situation is currently weak and two-thirds (67%) saying they now are less comfortable making household purchases than they were six months ago.
- The RBC Investment Index currently stands at 17.6, down from 22.5 in January. This index has also declined to an all-time low for the fourth consecutive month. Two-thirds (66%) of consumers continue to say they are less confident now than they were six months ago in their ability to make investments for the future, and 70% think it is a bad time to invest in the stock market.
“The continued decline of consumer confidence comes in the face of rising unemployment and reports of big layoffs by major employers,” said Marc Harris, co-head of Global Research, RBC Capital Markets. “Consumer confidence and economic recovery are in a chicken-and-the-egg situation. The economy can’t begin to recover without people spending and investing. Yet without signs of recovery, consumers and investors will stay on the sidelines.
“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 and 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 February 5-9, 2009, by survey-based research company Ipsos Public Affairs.