U.S. consumers still pessimistic about economy

RP news wires
Tags: talent management

A majority of Americans (82 percent) feel their local economy will stay the same or weaken within the next six months, according to inaugural survey findings from the RBC Consumer Outlook Index, the new monthly survey of U.S. consumers released today by RBC. However, there are signs of growing confidence, with just over half of Americans (51 percent) now feeling optimistic about their personal financial situations.

The RBC Consumer Outlook Index provides the most comprehensive, forward-looking analysis of consumers' national and local perceptions of the economy and their personal financial situation based on a representative nationwide sample of 1,007 U.S. adults polled from April 1-5, 2010, by research company Ipsos. Going forward, RBC will publish the Index on a monthly basis. Future reports will include comparisons and analysis regarding significant shifts in consumer attitudes and behaviors, as well as regional breakouts.

"We strongly believe this first look at what consumers are thinking now will be of tremendous value to those looking for insightful and predictive market analysis," said Marc Harris, co-head of global research at RBC Capital Markets. "We think that investors will tune in for the data, talk about it and trade on it."

Unlike other indices which take a retrospective approach, RBC's monthly index offers market participants the most up-to-date and detailed projections of the attitudes and behaviors of U.S. consumers. With 36 questions, more than double the number of other indices, the RBC Consumer Outlook Index is unmatched in terms of depth, providing a rich trove of data for a better understanding of what consumers are thinking now regarding their personal financial situation, job status and security and the current and future state of the national and local economies. The survey also includes a fixed number of questions related to spending, saving and investor confidence.

The survey found that consumers are also increasingly confident about their current personal financial situations. More Americans feel good (51 percent) than bad (45 percent) about their personal financial situation, a reversal of March benchmark data (42 percent good versus 55 percent bad). Consumers also feel better about their spending money, up six points from March benchmark data (42 percent good in April versus 36 percent good in March).

Although close to half of consumers (46 percent) expect interest rates to increase over the next six months, they are also split on whether now is a good time to buy real estate, such as house or a vacation property, with 34 percent saying now is a good time to buy and 36 percent saying it is not.

Despite gains in the stock markets over the past year, Americans also are divided over whether this is a good time to invest in the markets, with 20 percent saying it is a good time, 28 percent saying it is a bad time and 52 percent saying they are unsure. However, this is an improvement from benchmark data collected in March, when 38 percent thought it was a bad time to invest.

Asked if they are more or less confident about job security for themselves, their family or other people they know personally, only 13 percent of those polled said they are more confident, 41 percent said they are less confident and 42 percent said their comfort level had not changed. Again, however, this was an improvement over March's unreleased benchmark data, when 49 percent were less confident.

"While consumer expectations remain weak in an absolute sense and may not be improving at a torrid pace, they continue to show incremental improvement and steady progress after bottoming out during the financial crisis and recession, particularly with consumers showing growing confidence in their personal financial situations," said Harris. "People do feel somewhat better but are by no means ready to let loose and rejoice."

Americans' cautiousness is reflected in their plans to use expected tax refunds. Four-in-ten (45 percent) of those respondents who believe they are receiving a tax refund this year said they would use the refund to pay down or pay off debt, and 26 percent said they plan to save their refund. Just 28 percent plan to use a tax refund to buy things they want or need.

While a slight majority of Americans (56 percent) continue to believe the United States is on the wrong track, this was an improvement from benchmark data collected but not released in March, where 62 percent felt the U.S. was heading in the wrong direction.

Finally, Americans expressed skepticism about the benefits of the recently enacted healthcare reform legislation. A majority of Americans think that healthcare reform will result in their seeing higher taxes (75 percent), higher out-of-pocket healthcare costs (68 percent) and a reduced quality of care (53 percent). Three-quarters of the survey respondents (76 percent) doubted that healthcare reform would lower their health insurance premiums. 

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