RBC's monthly consumer confidence index for February inched down as the unrest in Egypt, rising fuel prices and volatile markets weighed on consumer sentiment. But Tom Porcelli, RBC's U.S. Economist, says he is surprised consumer confidence didn't drop further.
The index declined to 44.5, down 0.4 points from January's 44.9 but still above the 42.6 points recorded a year ago. The survey also found that 62% of Americans are not confident in municipal bonds as an investment, with only 22% saying they were. But they are more confident about their own personal finances and more Americans think now is a good time to buy stocks.
"Although the RBC Consumer Outlook Index has done nothing but move sideways since hitting a post-recession high in December, it's surprising that consumer confidence didn't fall even more, given recent events," said RBC Capital Markets Chief U.S. economist Tom Porcelli. "It appears that the Index was backstopped by future expectations, which reached their highest level in a year."
The Expectations Sub-Index perked up slightly to 56.8, from 55.3 in January, indicating that more Americans think the economy will get better in the next year. One-in-four consumers (23%) say they think the economy in their community will be stronger in six months, slightly more than the 20% who say it will be weaker. And 30 percent are confident that their own personal finances will improve in the next six months, compared with only 20% who expect them to weaken.
Americans fear inflation: 88 percent of consumers expect fuel prices to go up in the next and 56% expect overall inflation to increase in the next five years.
When asked where they think new jobs will appear over the next three months, most consumers expect the healthcare industry (45%), information technology field (31%), and manufacturing sector (27%) will produce the most jobs.
The Investment Confidence Sub-Index held steady at 39.0, a tick above last month's 38.9. Twenty-two percent think it is a good time to invest in stocks, compared to 29% who believe the opposite. This is the highest level of confidence in the markets in more than a year.
Sixty percent say the country is on the wrong track, compared to 40 percent who say it is headed in the right direction. The "wrong track" number, although improved from last month, remains above the 60% level for the tenth consecutive month.
This month’s RBC U.S. Consumer Outlook Index is based on data collected from interviews with a nationally representative sample of more than 1,011 U.S. adults conducted over January 28-31, 2011 by Ipsos, the world's second-largest market and opinion research firm.