Prices at the pump push consumer sentiment down

06.12.09
By Nicholas Storie

A new survey shows that consumer sentiment has declined during June and notes that rising gas prices may be one factor.

According to the latest results from RBC's Consumer Attitudes and Spending by Household Index, American's current view on economic conditions waned from May's reading.

Many Americans have been recently battling on a number of financial fronts ranging from paying off credit card debt to keeping up with home loan payments to avoid foreclosures. But with gas prices rising again, even those families hoping for a weekend getaway as a respite from their money troubles may find themselves reconsidering their travel plans.

The June reading found fewer consumers have confidence in the strength of their local economies than in May and more are worried about their own personal financial situations.

However, the good news from the RBC indicator is that consumers still see light at the end of the tunnel.

"The June reading of the RBC CASH Index suggests that consumers are disappointed by the recent spate of bad news," said RBC Capital Markets managing director Larry Miller. "However, consumer expectations continue to show improvement."

The RBC Expectations Index increased by almost 7 points in June marking the fourth consecutive months that consumers have improved their outlook.

Consumers may be picking up on the increased optimism being expressed by business leaders as well.

Earlier this week, Grant Thornton released results of its Business Optimism Index which increased to 54.5 in May - a level considered to be in line with pre-recession figures.

The group also reported that over half (54 percent) of all respondents foresee economic recovery beginning in the first half of 2010.

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