U.S. consumer sentiment inches up after six months of declining confidence, according to RBC CASH Index

Fri May 9, 7:03 AM

NEW YORK, May 9 /CNW/ - Americans' economic enthusiasm rallied slightly this month, increasing nearly 10 points and reversing six straight months of declining confidence, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. The survey, which measured the attitudes of 1,000 consumers earlier this week, found respondents more positive about their future economic prospects, but still worried about job security. As a result of these mixed attitudes, the overall RBC CASH Index, released today by RBC, stands at 39.0 for May, up from its previous all-time low of 29.5 in April.

"Consumers are beginning to look beyond the current economic downturn, as evidenced by the increase in their expectations for the future," said T.J. Marta, economic and fixed income strategist for RBC Capital Markets. "The fact that Americans' perception of the jobs environment weakened is not inconsistent with the rebound in the overall index, as the job market tends to lag the economic cycle."

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 U.S. adults polled from May 5-7, 2008, by survey-based research company Ipsos Public Affairs. The margin of error was +/-3.1 per cent.

Highlights of the survey results include:

    
    -  Consumers' economic outlook brightened this month, as evidenced by the
       RBC Expectations Index, which increased more than 24 points in May,
       but remains in negative territory for the fifth consecutive month and
       stands at -24.1. Currently, fewer than one-third (32 per cent) of
       Americans believe their local economy will be weaker in the near
       future, down from 38 per cent last month.

    -  The RBC Current Conditions Index, at 57.4, showed a slight increase
       when compared to the 54.6 registered last month. The increase in the
       index is being driven by improving attitudes toward the current state
       of personal finances, with 30 per cent of consumers rating personal
       finances as strong, compared to 25 per cent in April. Attitudes toward
       the current state of their local economy remained statistically
       unchanged in May, with 15 per cent of consumers again this month
       rating their local economy as strong, and 42 per cent of consumers
       rating their local economy as weak, compared to 41 per cent in April.

    -  Americans' attitudes toward investing improved slightly in May,
       increasing the level of the RBC Investments Index to 60.7, up more
       than four points from the 56.4 level recorded last month. Consumers
       reporting that the next month will be a good time to invest in the
       stock market held steady at 27 per cent, compared to 28 per cent in
       April. Confidence in real estate investment also held steady in May.
       More than one-third of consumers (37 per cent) believe the next 30
       days will be a good time to buy real estate, compared to 38 per cent
       last month.

    -  At 93.7, the RBC Jobs Index dropped to the lowest level since the
       index began in January 2002. Anxiety over future job loss increased in
       May, with one in four (26 per cent) Americans reporting job loss is
       likely in the next six months, up from 20 per cent in April. Consumer
       confidence in personal job security also declined slightly this month,
       dipping one point to 27 per cent, compared to 28 per cent in April.

The entire RBC CASH Index report can be viewed at: www.rbc.com/newsroom/rbc-cash-index.html.

Contacts

Loretta A. Healy
The Hubbell Group
Inc.
(781) 878-8882

Kevin Foster
RBC Capital Markets
(212) 428-6902