Unable to shrug off the effects of rising energy prices and a slowing housing market, consumer confidence dropped in August, according to the most recent results of the RBC CASH (Consumer Attitudes and Spending by Household) Index, which measured the attitudes of 1,001 Americans earlier this week. Consumer discontent is widespread, with the greatest decline occurring in confidence regarding economic expectations. The only bright spot is consumer confidence in job security which rebounded this month. As a result, the RBC CASH Index, released today by RBC Financial Group, declined to 74.8, compared to 80.1 in July.


“The drop in the overall index to 74.8 extends the downtrend in place since February, a decline which is consistent with the rise in energy prices and a slowing in the housing market during this period,” said T.J. Marta, Economic and Fixed Income Strategist for RBC Capital Markets. “The price of crude oil, for example, has risen close to $20/bl to a record $77.03 in recent sessions, and the national average for a gallon of regular unleaded gas had risen 80 cents to a record $3.04. Additionally, the rate for a 30-year mortgage had risen 0.80 per cent to 6.79 per cent during this period, and while that has fallen in recent weeks to 6.42 per cent, homeowner affordability has dropped to its lowest level since 1989 and existing home sales continue to fall from their June 2005 peak.” Added Marta, “RBC believes that the U.S. consumer will continue to retrench during the second half of 2006.”


The RBC CASH Index is a monthly national survey of consumer attitudes on the current and future state of local economies, personal finance situations, savings and confidence to make large investments. The Index is composed of four sub-indexes; RBC Current Conditions Index; RBC Expectations Index; RBC Investment Index; and, RBC Jobs Index. The Index is benchmarked to a baseline of 100 assigned at its introduction in January 2002. This month’s findings are based on a representative nationwide sample of 1,001 U. S. adults polled from August 7-9, 2006 by survey-based research company Ipsos Public Affairs.


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