Southeastern U.S. Consumer Outlook Slips Slightly: RBC Bank
However expectations for economic improvement are very high
Raleigh, N.C. – September 15, 2010 – Overall consumer confidence in the Southeastern United States declined slightly between June and September 2010, according to RBC Bank’s Southeastern Consumer Outlook Index (RBC COI) released today. However, confidence within the region appears to be in better shape than in the rest of the country, which has seen more significant declines over the last three months.
The RBC COI, which compiles quarterly data for the six U.S. Southeastern states of North and South Carolina, Georgia, Florida, Alabama and Virginia, stands at 52.0 – lower than the previous quarter’s 57 score in the region, but above the 43.6 scored nationally. Looking ahead, the RBC COI Expectations Index level in the Southeast stands at 83.0 for the third quarter 2010, 25 points above the region’s second quarter mark of 58.0 and more than 60 points ahead of the nation’s 22.1 Expectations Index level as measured in the current quarter.
“The rise in the Expectations Index shows consumers are growing more hopeful about the future, but the lack of meaningful job growth is still weighing on overall consumer confidence,” said Tom Porcelli, director and head of U.S. Market Economics. “Indeed, the pullback in the Current Conditions Index, which has a strong relationship with consumer spending, is yet another caution sign on the bumpy road to recovery.”
The RBC COI utilizes a 26-question battery among an online panel weighted to be representative of the U.S. national population. The study analyzes consumers’ perception of current conditions, the job market, investment confidence and expectations.
The RBC COI Current Conditions in the Southeast has also shown slight declines in the period, down to 57.5 in the third quarter as compared to 59.6 in the second quarter. A primary driver of the weak current conditions is consumers’ lack of confidence in the health of their local economies. Residents in Florida and Georgia residents are particularly pessimistic with two out of three (67% and 66% respectively) saying their local economy is very weak.
Southeastern consumers continue to have significant concerns about employment prospects. The RBC COI Jobs in the Southeast for the third quarter of 2010 held steady at 67.5, with no change from the second quarter. Residents of South Carolina (56%), Florida (55%) and Georgia (55%) continue to have the greatest experience with job loss in their immediate circle over the last three months. While these levels remain high, they are significantly lower than the levels observed during 2009 in Georgia (72%), North Carolina (73%) and South Carolina (76%) where almost three-quarters of consumers know someone who has lost a job in the last 6 months. The 2009 data are from RBC’s previous consumer confidence index known as the CASH Index.
The RBC COI Investment for the Southeast stands at 71.5 for the third quarter – a slight improvement over the second quarter’s 68.8. However, in an absolute sense, consumers remain very concerned about the investment environment. A majority of Virginians (50%) and a large number of Alabamans (45%) and North Carolinians (43%) think it is a bad time to invest in the stock market.
Likewise, a majority of Virginians (51%), North Carolinians (53%), Alabamans (62%) and Floridians (53%) say they are now less comfortable making a major purchase decision than they were six months ago.
Southeastern consumers continue to show improved expectations for their economic future. The RBC COI Expectations stands at 83.0 for the third quarter of 2010 - 25 points above the second quarter mark of 58.0. More South Carolinians (36%) and Georgians (38%) are bullish on the future of their personal finances. However, many Floridians (32%), Virginians (30%) and South Carolinians (40%) believe their local economy will continue to weaken over the next six months.
Expanding further to the future of the entire U.S. economy, South Carolinians (61%) and Georgians (47%) are more likely to say that the U.S. economy will improve in the next year. Virginians (35%), Alabamans (38%) and Floridians (34%) are the most likely to indicate the national economy will reverse course and weaken again in the next year.
The RBC COI is a composite measure of national consumer attitudes toward the state of local economies, personal financial situations, savings and investment, and job security. The recent three-month analysis includes a focused look at the Southeast where RBC Bank serves clients through its retail and commercial banking network.
About RBC Bank
RBC Bank, headquartered in Raleigh, N.C., offers a wide range of financial services and advice to individuals, businesses and public institutions throughout the Southeast. RBC Bank’s network includes more than 420 full-service banking centers in six states (Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia), an extensive ATM network and telephone and online banking. RBC Bank is the 38th largest U.S. bank by consolidated assets, according to SNL Financial’s List of the Nation’s 50 Largest Banks, September 2, 2009. RBC Bank is a wholly-owned subsidiary of Royal Bank of Canada (RBC) (RY on the TSX and NYSE), Canada's largest and most stable bank as measured by assets and market capitalization. In August 2009, Global Finance Magazine ranked RBC as the safest bank in the Western Hemisphere. RBC is also one of the world's financial, social and environmental corporate leaders, having appeared on the Dow Jones Sustainability World Index every year since its creation in 1999. Additional information about RBC Bank may be found at www.rbcbankusa.com.