Consumer Confidence Improves in the Southeast; Slower Growth in the U.S. as a Whole
RBC Southeast Consumer Outlook Index Shows Positive Trends in the Southeast
Raleigh, N.C. - June 6, 2011 – American consumer confidence blossomed in the second quarter of 2011 in the Southeastern states, according to the RBC Southeast Consumer Outlook Index (COI), released today. Confidence also increased at a more measured pace across the rest of the country.
Consumer confidence in the Southeastern U.S. has returned after stagnating through the previous six months. Over the last quarter, confidence in the Southeast has passed the rest of the country. The RBC Southeast COI stands at 47.6 – well above the 1st quarter mark of 42.6 and above the level observed nationally of 44.8.
“Americans across the nation are feeling slightly more secure about their employment prospects and current financial conditions – though they remain concerned about future prospects,” said Tom Porcelli, Chief U.S. Economist for RBC. “Residents of the Southeastern states, on the other hand, are feeling markedly better about their employment security, current financial health and investment opportunities.”
The RBC COI Current Conditions in the Southeast has improved, up to 37.2 in the second quarter as compared to 32.3 in the first quarter. These improvements have surpassed the national numbers. While consumers in the Southeast remain uncomfortable about their ability to make major purchases (47 percent less comfortable) or household purchases (33 percent less comfortable), these numbers are down from the first quarter (50 percent less comfortable with major purchases/ 37 percent less comfortable with household purchases).
The strongest driver of the recovery in consumer confidence is improvements in perceived job security. The RBC COI Jobs in the Southeast for the second quarter of 2011 shows significantly higher employment security, standing at 55.0, up from the 48.7 seen in the first quarter of 2011. Residents of the states of Georgia (44 percent) and Alabama (40 percent) have the greatest experience with job loss in their immediate circle over the last six months. The overall rate of experience with job loss in the Southeast has dropped to 37 percent (from 47 percent in Q1).
The RBC COI Investment for the Southeast rose to 41.2 for the second quarter – a small improvement from the first quarter’s 38.9. However, in an absolute sense, consumers remain very concerned about the investment environment. Consumers in South Carolina (54 percent) are the most likely to say it is a bad time to invest in the stock market. Meanwhile, consumers in Virginia (52 percent) are the least confident that it is a good time to buy real estate.
Southeastern consumers continue to be more optimistic about their economic future than the nation as a whole. The RBC COI Expectations stands at 58.4 for Q2, 2011. This is above the 55.5 mark in the first quarter and well about the 54.6 score for the US as a whole (in Q2). Residents of Georgia (38 percent stronger) and South Carolina (35 percent stronger) appear to be the most positive about the future of their local economy. Residents of Georgia (38 percent stronger) and Florida (36 percent stronger) appear to be the most positive about their personal financial situation.
“Compared to consumers nationwide, consumer confidence in the Southeast has come back at a faster pace. Much of this change is due to the sense that employment opportunities have returned and employment security is on the rise,” said Porcelli.
About the RBC Consumer Outlook Index
The RBC Consumer Outlook Index Study is conducted by Ipsos-Public Affairs. Between April and June 2011, 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.
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 40th largest U.S. bank by consolidated assets, according to SNL Financial’s List of the Nation’s 50 Largest Banks, September 2010. 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. For ten consecutive years, RBC has been named to the prestigious Dow Jones Sustainability World Index. RBC has been listed as one of the most sustainable large corporations in the world for six years in a row, according to the annual ranking by Corporate Knights. And, in February of this year, RBC was ranked 31st in The World's Most Respected Companies by Barron's, and third among financial institutions. More information about RBC Bank may be found at www.rbcbankusa.com.