The pause in the increase in gas prices and a sense that the job market is improving help lift the RBC Consumer Outlook Index 3.8 points to 46.7 in June, up from 42.9 in May. This is the highest level it has ever been at since the financial crisis struck in September 2008.
“The rise in consumer confidence in June was broad-based, with all of the key underlying metrics rising,” said RBC Capital Markets' Chief U.S. Economist Tom Porcelli. “This improvement is likely a response to the sharp pullback in gasoline prices over the last few weeks. That said, it’s important to note that even with this welcomed increase, confidence remains below the historical average and is only slightly better than the average for all of 2010.”
With the federal debt ceiling having been reached and Congress now focused on deficit reduction, RBC asked Americans how they would like the government to handle the deficit and found many resistant to the solutions that have been talked about. Only 27% want to see defense spending reduced, and only 17% want to see Medicaid cut. Even fewer, 12%, want to cut Medicare or Social Security (10%).
Only 18% are willing to accept tax increases as part of a budget deal. Instead, 59% want Congress to cut an unspecified group of “other government programs.”
“While most people recognize that the deficit is a significant issue, it seems that few appreciate what really is required to fix the problem,” Porcelli said. “”Few are willing to see entitlements, the most problematic part of the deficit, scaled back. Instead, most favor scaling back ‘other’ government spending, which accounts for a very small share of the deficit. The lack of willingness by voters to take on these issues highlights the high hurdle for elected officials to adopt the real and necessary reforms required to get the deficit under control.”
The RBC Consumer Outlook Index is based on a survey of more than 1,000 adults each month.