RBC CASH Index: Stabilization In Consumer Spending Appears On Horizon

Reversing seven months of crumbling confidence, Americans' economic enthusiasm rallied this month, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index, which posted its first significant improvement since September 2008. Overall consumer

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Reversing seven months of crumbling confidence, Americans’ economic enthusiasm rallied this month, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index, which posted its first significant improvement since September 2008.

Overall consumer confidence advanced 30.1 points, bringing the RBC CASH Index to 38.3 in April, compared to 8.2 in March. Consumer sentiment was bolstered by a 58.3 point increase in Americans’ expectations for the future. Americans’ attitudes about current conditions and investing also increased in the past month, but they continue to worry about jobs.Highlights of the survey results include:

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 due largely to an improvement in Americans’ expectations for their local economy and personal financial situation. In April, nearly four-in-ten consumers (39%) believe their community’s economy will be stronger in the next month, compared to 30 per cent in March, while only 21% believe it will continue to weaken, compared to 30% last

month.

After dropping for six consecutive months, the RBC Jobs Index edged up 4.4 points in April to 45.2, compared to 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 remains very low. This month, the share of consumers who are more confident in their job security now than they were six months ago held steady at 19%, compared to 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 to 39% last month.

“The April readings provide more evidence of a stabilization in consumer spending,” says 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.”

L.D.

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