NEW YORK — While the news has been dominated by the European debt
crisis, worries about jobs are what weighs most on U.S. consumer
sentiment, according to the latest RBC Consumer Outlook Index. Amid
concerns about job security, consumer confidence remained nearly flat
for October, the third consecutive month with little change. The RBC
Consumer Outlook Index dipped to 39.2, down one point from last month.
Consumer confidence is below the level of a year ago (41.0) and also
below the average level during the recession (40.2).
Although global economic issues may not be leading consumer sentiment,
most Americans (59 percent) are following developments in the European
financial crisis. More than one-third of Americans overall (36 percent)
say that the crisis has worsened their confidence in the U.S. economy.
Despite recent market volatility, nearly half (47 percent) of Americans
have not made any changes to their retirement fund contributions. Seven
percent have shifted away from stocks, six percent have decreased their
retirement fund contributions and two percent have increased
contributions.
The dip in consumer confidence this month was driven by a drop in the
RBC Jobs Index, which fell 3.3 points to stand at 47.2, its lowest level
since March 2010. Nearly half (46 percent) of consumers say they or
someone they are close to has lost a job in the past six months, up nine
points from last month. Consumers are increasingly worried about job
security, with one-in-three (34 percent) saying they are currently
concerned about losing their job, up six points from last month.
“Jobs remain the biggest driver of confidence, and growing worries about
employment security are affecting the consumer outlook,” said Tom
Porcelli, chief U.S. economist at RBC Capital Markets. “But as our
survey shows, you can‘t overlook the impact the European crises is
having on U.S. confidence. We are quite literally layering more worries
into an already fragile psyche.”
While the RBC Jobs Index declined, the other three sub-indexes improved
slightly from last month, though not enough to fully offset the
increased worries about employment:
• The RBC Current Conditions Index showed little movement, improving 0.3
points to stand at 28.5. Nine percent of consumers are more comfortable
now than they were six months ago with making a major purchase, such as
a home or car, compared to 56 percent who are less comfortable.
• The RBC Expectations Index also showed little movement, rising 0.2
points to reach 50.8, but down from the level of a year ago (53.5).
One-in-five consumers (21 percent) expects that the U.S. economy and
their own financial situation will improve in the coming 12 months,
while 36 percent expect things to get worse.
• The RBC Investment Index improved marginally, edging up 0.6 points
from last month to stand at 32.7. Like the other sub-indexes, the
Investment Index is down from the level of a one year ago (35.3). In the
wake of the worst quarter for investments in three years, more than
one-in-three Americans (35 percent) think that the value of their
investments or savings will decline during the next three months.
Three-in-four Americans (75 percent) say the U.S. is on the wrong track,
the same as in September, and up from 63 percent in October 2010.
