Consumer Confidence Up Across Southeast U.S.: RBC Bank Consumer Outlook Index
Improved Jobs Picture Boosts Optimism
Raleigh, N.C. – December 14, 2010 – Consumer confidence in the Southeastern United States has improved in the fourth quarter of 2010, according to the RBC Southeast Consumer Outlook Index (COI), released today. The improved confidence rating is in keeping with the strong level of expectations reported in September’s RBC Southeast COI. Over the last three months, the COI results show the Southeast has kept pace with the rest of the nation, where confidence has likewise blossomed for the first time this calendar year. The overall RBC Southeast COI at 42.6 is very close to the 42.7 seen nationwide and is up from 39.9 percent registered in the third quarter for the Southeast.
The RBC Southeast COI compiles quarterly data for the six U.S. Southeastern states of North and South Carolina, Georgia, Florida, Alabama and Virginia, gathering comparative data on the region’s take on Current Conditions, Jobs, Investment and Expectations. The historical mean for the COI is 50, which indicates a score over 50 represents above average consumer confidence and a score below 50 represents below average consumer confidence.
For the fourth quarter, the RBC COI Current Conditions assessment in the Southeast has also moderately improved, up to 31.9 in the fourth quarter as compared to 30.6 in the third quarter. Consumers in the Southeast remain more concerned about the health of their local economy (61percent very weak) than consumers nationwide (55 percent very weak). However, when it comes to their personal finances (45 percent very weak) Southeastern consumers are in-line with the rest of the country (45 percent very weak).
The strongest driver of the recovery in consumer confidence in the Southeast is the improvements in perceived job security. The RBC COI Jobs in the Southeast for the fourth quarter of 2010 has improved to 49.6, up from 44.9 in the second and third quarters. Residents of the states of Alabama (57 percent) and Georgia (53 percent) continued to have the greatest experience with job loss in their immediate circle over the last six months. However, the overall rate in the Southeast has fallen to 46 percent (from 51 percent in Q3). This is the first quarter since 2008 when a majority of consumers report not having experienced job loss in their circle in the last six months.
“The rise in confidence comes at an opportune time – we are entering the holiday shopping season with a bit of momentum,” said Tom Porcelli, chief U.S. economist for RBC. “But even more important, the rise in overall confidence was driven in part by the employment backdrop, which has improved over the second half of the year. If our expectation is right that job growth continues to accelerate in 2011, the economic landscape could look very different as the year unfolds.”
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 percent) and a large number of Alabamans (45 percent) and North Carolinians (43 percent) think it is a bad time to invest in the stock market.
Likewise, a majority of Virginians (51 percent), North Carolinians (53), Alabamans (62 percent) and Floridians (53 percent) say they are now less comfortable making a major purchase decision then they were six months ago.
Southeastern consumers continue to show improved expectations for their economic future. The RBC COI Expectations stands at 55.4 for Q4, 2010, above the 51.4 mark in the third quarter. Residents of Virginia (33 percent stronger) and North Carolina (34 percent stronger) appear to be the most positive about the future of their local economy. Residents of Alabama (39 percent weaker) appear to have the least confidence in the future of their economy.
About the RBC Consumer Confidence Index
The RBC Consumer Outlook Index Study is conducted by Ipsos-Public Affairs. Between October and December 2010, the RBC COI poll interviewed representative online panel of at least 1,000 adults nationwide each month; 3,000 interviews were conducted over the last six months.
Starting in November 2010 the RBC COI was re-scaled to correspond with a 0-100 scale in order to maximize interpretability of month-to-month and year-over-year changes in consumer outlook. The Consumer Outlook Index is still based on the same set of underlying questions and continues to capture the same sense of American consumer confidence. The new bounded range for the RBC COI produces more controlled monthly fluctuations, which enables greater ability to diagnose meaningful changes across the time series. Ipsos has retroactively calculated the re-scaled score for all historical data.