Higher gas prices, slumping retail sales, volatile stock markets and continuing joblessness have resulted in across-the-board drops in consumer confidence, sending the November 2009 RBC CASH (Consumer Attitudes and Spending by Household) Index tumbling to 30.2, down 21.6 points from October’s 51.8 reading. The decline was the sharpest one-month drop in consumer sentiment since last autumn’s financial crisis.
The slide in consumer confidence during the past month erased the fragile gains made in recent months, returning sentiment to levels last seen early this summer. The weakness was consistent across the RBC Index’s four sub-indices, which measure consumers’ views of current conditions, their expectations for the future and their confidence in investing and job security.
Highlights of the survey results:
- Confidence in current conditions worsened substantially, with the RBC Current Conditions Index for November 21.5 points from the October reading of 50.3. The share of consumers saying their personal financial situation is weak has increased to 33% in November from 27% last month. The unease with personal finances is 69%report they are less comfortable than they were six months ago, compared with 63%.
- Consumer expectations for the near-term economic future fell substantially in November, driven primarily by weakness in attitudes regarding local economies. The RBC Expectations Index for November 2009 plunged to 21.9, a 32.3-point drop from its 54.2 reading in October, which had been the strongest level of consumer expectations in 2009. The primary reason for concern in the near term is with consumers’ local economies. Currently, fewer than one-third of Americans (30%) expect their local economy to be stronger six months from now, down from 36% in October.
- The RBC Investment Index dropped 21.4 points this month, to 36.6 from a 58.0 level in October. The slide stems primarily from decreased confidence in the ability to invest in the future. The number of consumers who say they are less confident investing for the future has risen to 59%, a sizeable increase in pessimism compared to October, when 54% said they were less confident.
- The RBC Jobs Index for November fell less than the other indices, dropping 8.4 points to stand at 50.9, compared with 59.3 in October. Confidence in the job market has declined, mirroring continuing job losses
in the economy. Worry regarding job conditions jumped in the past month. Two-thirds of consumers (66%) report they are less confident about job security this month, compared to 58% who say they are less confident in October.
“This month’s RBC Index results show that American consumers are not yet convinced that their financial and employment situations are stable,” said Ira Jersey, head of US interest rate strategy for RBC Capital Markets. “The sharp drops in the Expectations and Investment sub-indices highlight the challenges that personal consumption is likely to face over the next several quarters. Although we have pulled back from the abyss, consumer attitudes remain susceptible to negative news.”
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 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 1,002 US adults polled from October 29-November 1, 2009, by survey-based research company Ipsos Public Affairs.