Consumer confidence drops sharply on weak economic news, according to RBC Index

• Press Release
• Source: RBC; RBC Capital Markets
• On 7:30 am EST, Thursday November 5, 2009

NEW YORK, Nov. 5 /CNW/ - Consumer confidence fell across the board in the past month, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index. The RBC Index for November 2009 stands at 30.2, down 21.6 points from October's 51.8 reading. Higher gas prices, slumping retail sales, volatile stock markets and continuing joblessness resulted in the sharpest one-month drop in consumer sentiment since last autumn's financial crisis.

"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 U.S. 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."

The RBC 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 1,002 U.S. adults polled from October 29-November 1, 2009, by survey-based research company Ipsos Public Affairs. The margin of error was +/-3.1 per cent.

The decline in consumer confidence during the past month erased the 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 include:

	      -  Confidence in current conditions worsened substantially, with the
	         RBC Current Conditions Index for November 2009 standing at 28.8,
	         down 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 per cent in November from 27 per cent last month.
	         The unease with personal finances is reflected in lower confidence
	         in making major purchases such as a house or car: Seven in ten
	         consumers (69 per cent) report they are less comfortable than they
	         were six months ago, compared to 63 per cent who were less
	         comfortable in October.

	      -  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 per cent) expect their local economy to be stronger
	         six months from now, down from 36 per cent 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 per cent, a sizeable increase in
	         pessimism compared to October, when 54 per cent 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 to 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 per cent) report they are
	         less confident about job security this month, compared to 58 per
	         cent who said they were less confident in October.
	    

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

For further information

Contacts: Loretta A. Healy, The Hubbell Group, Inc., (781) 878-8882
Kait Conetta, RBC, (212) 428-6409

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