The U.S. consumer outlook index compiled and tracked by RBC Capital Markets took a hit for August as a majority of those surveyed said the down-to-the-wire deal between Congress and President Barack Obama to raise the nation’s debt ceiling ended up making them less confident in the country’s economic recovery.
More than half (54%) of 1,014 U.S. adults surveyed by global opinion research firm Ipsos on behalf of RBC said that the debt ceiling debate made them feel less confident in the economy, while 42% said it has made them less confident in their own finances and investments.
Indicative of concerns with the state of the country, the number of Americans saying the U.S. is on the wrong track spiked in August to 76% up from 63% last month – the highest level for this metric since July 2008, noted RBC.
Accordingly, RBC’s consumer outlook index declined to 40.2 for August, down 3.5 points from 43.7 in July and 6.5 points below the post-recession high of 46.7 in June.
“There is clearly a strong inclination to highlight the wrangling in Washington over the debt ceiling as having weighed heavily on confidence this month,” said Tom Porcelli, RBC’s chief U.S. economist, in a statement. “However, we would caution against assigning all the blame on this one aspect of the recent backdrop, which to say the least, has been disappointing.”
And although the overall consumer outlook index declined, employment security remained relatively stable in August, with RBC’s jobs sub-index falling only 0.8 points to stand at 52.0. While this is down from June’s high-water mark, it remains above the low point for the year. Job confidence also remains stable, as actual experience with job losses fell slightly from last month to stand at 37%, RBC reported.
However, 31% of Americans now say they or someone in their household is currently worried about losing their job, up from 25% in July, the firm noted.
For freight carriers, the weakening of RBC’s current conditions sub-index provides concern as it gauges the willingness of consumers to purchase a range of goods. That metric dipped 4.5 points to 28.9 in August from 33.4 in July, noted RBC, with three out of five Americans (59%) stating they are less comfortable making a major purchasing decision, such as a home or car, than they were six months ago – a metric that’s up from 48% in July.
Also, after declining for two months, gas prices have reemerged as a major concern for consumers. Pump prices have risen over the last month, and the number of consumers expecting gas prices to rise in the next year has increased to 82%, up from 67% in July, said RBC.