Reversing seven months of crumbling confidence, Americans’ economic enthusiasm rallied this month as the RBC CASH (Consumer Attitudes and Spending by Household) Index hit 38.3, a 30.1-point jump from its dismal 8.2 March level and the first significant improvement since September 2008.
The rebound provides a cautious and preliminary indication that consumer confidence is, at the very least, stabilizing, RBC said.
Consumer sentiment was bolstered, in large part, by a 58.3 point increase in Americans’ expectations for the future. US consumers’ attitudes about current conditions and investing also increased in the past month, though concern about job security remains persistent.
Highlights of the survey results:
- Advancing out of negative territory for the first time in 2009, the RBC Expectations Index increased 58.3 points to 32.4 from its -25.9 reading in March. The shift in the index is largely because of an improvement in Americans’ expectations for their local economy and personal financial situation. In April, nearly 39% believe their community’s economy will be stronger in the next month, compared with 30% in March. Only 21% believe it will continue to weaken, compared with 30% last month. In addition, only 13% of Americans expect their personal financial situation to weaken over the next six months, compared with 18% in March.
- The RBC Current Conditions Index improved markedly in April to 35.8, compared with 14.8 in March. This is the second consecutive month of gains in the RBC Current Conditions Index and the largest month-to-month increase in current conditions since September 2006. Americans’ assessments of their current personal financial situation as “weak” dropped to 30%, compared with 35% in March. Moreover, this month only 41% of consumers rate their current local economic conditions as weak, compared with 47% last month.
- Consumers’ overall opinions regarding investing improved significantly this month sending the RBC Investment Index to a reading of 44.8, up 20.2 points from 24.6 in March. The increase in the index is a result of improving attitudes toward stock and real-estate investments. Consumers reporting that the next 30 days will be a bad time to invest in the stock market dropped to 61%, down from 70% last month. More than half of consumers (51%) believe the next month will be a good time to buy real estate, compared with 43% in March. April marks the first time a majority of Americans think real estate is a good investment since 2005.
- After dropping for six consecutive months, the RBC Jobs Index edged up 4.4 points in April to 45.2, compared with 40.8 last month. Although consumers continue to be peppered with bad news on the jobs front, Americans’ confidence regarding overall job security held steady, but still remains very low. This month, the share of consumers who are more confident in their job security vs. six months ago held steady at 19%, compared with 18% in March. In addition, 37% of Americans say it is likely that they or someone they know will lose their job in the next six months, compared with 39% last month.
“The April readings provide more evidence of a stabilization in consumer spending,” said Larry Miller, managing director, RBC Capital Markets. “Stabilization does not mean recovery, but is a far better prospect than the free fall of late last year. Whether this translates into an improvement in consumer spending is another ball game, and one that is far too early to call.”
About the research: The RBC Cash Index is based on a monthly survey that measures the attitudes of Americans. 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 April 2-6, 2009 by survey-research company Ipsos Public Affairs.