Monday, November 09, 2009
RBC CASH Index
But one item I normally follow is the RBC CASH (Consumer Attitudes and Spending by Household) index. The last release was November 5th, and it was deeply disturbing. October's had taken an uptick, but for November:
The RBC Index for November 2009 stands at 30.2, down 21.6 points from October's 51.8 reading. Higher gas prices, slumping retail sales, volatile stock markets and continuing joblessness resulted in the sharpest one-month drop in consumer sentiment since last autumn's financial crisis.All four components fell. Gas prices are one big problem; concern over personal finances and local economies is a big factor, but job and investment expectation fell too.
However, this is serious:
Consumer expectations for the near-term economic future fell substantially in November, driven primarily by weakness in attitudes regarding local economies. The RBC Expectations Index for November 2009 plunged to 21.9, a 32.3 point drop from its 54.2 reading in October, which had been the strongest level of consumer expectations in 2009. The primary reason for concern in the near term is with consumers' local economies. Currently, fewer than one-third of Americans (30 per cent) expect their local economy to be stronger six months from now, down from 36 per cent in October.See page 3 of the underlying survey here for more detail. The low was 29 last December; and the trajectory from July through October was 31; 34; 38; 36. Results like these strongly suggest that many local economies WILL be weaker in six months.
Given that PCE last quarter had achieved its highest share ever of the economy, indications that consumer expectations are worsening have a sinister connotation. I am pretty sure that gas and energy prices are having something to do with this, but job and stock market expectations were low as well.
Economic data point from the Soviet of Washington: The local paper reported Sunday that sales tax collections in Snohomish County (north Seattle 'burbs) were down 14% (IIRC YoY) for the 3rd quarter. I suspect this is representative of statewide results. Since we have no state income tax, I think next year's legislative budgeting cycle will be VERY interesting. They managed to paper over this year's state budget by resorting to all matter of tricks...no such luck next year. I bet the cities have to be really hurting as well. No sign from the recent elections that the local body politic has gotten the message yet, either.
Looks to me like the people have figured out what's going to happen, even if the political class is still living in denial.
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