As the country heads into the holiday season, consumer confidence continues to rise from its low point two months ago, according to the November results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. The positive trend could signal a better-than-expected season for retailers who – in light of high energy prices, hurricane recovery efforts, and rising interest rates – were bracing for the worst.
The CASH Index, which is derived from telephone interviews with 1,000 individuals across the U.S., this week, stands at 81.0 for November, compared to 66.8 in October – but still below last year’s November results of 89.8.
Improved confidence lifted the RBC Expectations Index, set at 100 in January 2002, to 44.5 for November, an increase of 0.9 in October and the highest it’s been since May. November’s results mark a sharp reversal since September, when the index plunged to a negative 13.5; but expectations are still not as high as they were last year in November, when the index stood at 69.
“American consumers have had to contend with some unsettling developments in recent months, certainly enough to dampen their expectations about future economic conditions; but the rebound in those expectations speaks to the underlying strength of the economy,” said Vince Boberski, chief economist for RBC Dain Rauscher. “That’s good news for everyone, but particularly businesses that rely on strong sales during the holiday season.”
Americans’ expectations for local economic conditions also continue to improve. Currently, 25 per cent of respondents expect their economy to be much stronger in six months, compared to 22 per cent in October and 20 per cent in September, but still below November’s year-ago figure of 33 per cent. Similarly, 19 per cent expect their local economy to weaken over the next six months, compared to 28 per cent in October and 17 per cent a year ago.
Respondents expressed slightly greater confidence in their own financial condition, with one-quarter rating their situation as strong, compared to 23 per cent in October. Similarly, the RBC Investment Index stands at 82.8 for November, compared to 78 in October. While confidence in making major purchases like a home or a car remains unchanged from October, consumers are slightly more confident in making other household purchases (37 per cent more comfortable vs. 35 per cent more comfortable in October); additionally, fewer consumers report they are less comfortable making other household purchases (43 per cent less comfortable vs. 47 per cent less comfortable in October) – another positive sign for retailers.
The RBC Jobs Index also remained strong, as it stands at 119.8 for November, effectively tying its high in June and October and surpassing its level of 111 from a year-ago. Meantime, nearly six in ten respondents (56 per cent) report that they did not think that they or someone they knew would lose their job in the next six months – compared to 52 per cent in October and 53 per cent a year-ago.
RBC’s Consumer Attitudes and Spending by Household Index is a monthly national survey of consumer attitudes on the current and future state of local economies, personal financial situations, savings, and confidence to make large investments. The Index is benchmarked to the 100 reading assigned in January 2002 when it was first introduced. This month’s findings are based on a representative sample of 1,000 adults polled nationwide from November 7 through November 9, 2005, by survey-based research company Ipsos Public Affairs.
The entire RBC CASH Index report can be viewed at .
About RBC Financial Group
Royal Bank of Canada (TSX, NYSE: RY) uses the initials RBC as a prefix for its businesses and operating subsidiaries, which operate under the master brand name of RBC Financial Group. Royal Bank of Canada is Canada’s largest bank as measured by market capitalization and assets and is one of North America’s leading diversified financial services companies. It provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services on a global basis. The company employs approximately 60,000 people who serve more than 14 million personal, business and public sector clients through offices in North America and some 30 countries around the world. For more information, please visit .