The Virginia Index of Consumer Sentiment is 88.6 in August, down almost two points since last quarter, but more than two and a half points above its historical average. Despite the turmoil in Charlottesville, sentiment in the Central Region does not deviate from its historical average. The political divide in sentiment grows and is substantially larger than immediately after the November election. Inflation expectations increased slightly from last quarter.
Figure 1. Virginia Consumer Sentiment, past two years (black=VAICS, blue=historical VAICS average)
Consumer sentiment continues steady fall
The Virginia Index of Consumer Sentiment (VAICS) continues a year-long slide to 88.6. The index fell almost ten points since last summer, although it remains above the historical average. The preliminary national value is 97.6. Figure 2 shows the current index values for Virginia and the US.
Figure 2. Current Virginia and US Consumer Sentiment measures
Figure 3 shows the historical values for the VAICS and its two sub-indexes, the Index of Current Conditions (VAICC) and the Index of Consumer Expectations (VAICE). The indexes continue their retreat from the record highs of last summer, likely driven, in part, by uncertainty and fatigue from the political bickering in Washington. Consumers continue to note rising incomes and low prices as sources of positivity in the Commonwealth. Over half of respondents report that now is a good time to buy large, durable items and 33% say their household finances are improved from last year. Although consumer expectations are waning, the VAICE remains well above its average with 42% reporting that they believe business conditions will improve over the coming year.
Figure 3. Lifetime values for three Virginia indexes
Party divide in sentiment grows
Individual sentiment is influenced by political affiliation. Figure 4 illustrates sentiment in the Commonwealth for Democrats and Republicans and the five-year index averages for each. Sentiment among democrats is historically well above that of Republicans in the Commonwealth until the 2016 election. Heading into that election, the gap between the parties grew to 26 points in favor of Democrats. By November, the gap switched by over 50 points in favor of Republicans. The gap increased substantially over the winter and spring of 2017. In August 2017, 66% of Republicans expect the next five to ten years to be periods of economic growth and prosperity compared to only 13% of democrats.
Figure 4. VAICS by party (blue=democrat, red=republican, dashed lines=party five-year average)
Charlottesville sentiment no different from regional historical average
Consumer sentiment for the six regions in the Commonwealth are shown in Figure 5. Comparing regional index values over time is problematic due to the small sample size within each region. Figure 5 shows the average regional value of the VAICS (November 2011-August 2017, red dot), the typical variation from that average (black line), and the current value (blue dash). This depiction provides a meaningful way to examine the current regional VAICS values to their usual values. In August 2017, Southside and the Shenandoah Valley show above normal optimism while the remainder of the Commonwealth is within boundaries suggesting opinions are no different than is typical. Notably, Central Virginia, which includes Charlottesville, shows no difference from trend despite the events occurring there over the duration of this report's calling period.
Figure 5. Regional VAICS
Both short- and long-term inflation expectations increased by two-tenths of a point in the Commonwealth, as shown in Figure 6. The measures indicate direction of overall price growth anticipated by Virginians over the next year and next 5-10 years, respectively. These expectations are close their historical averages, suggesting respondents are not concerned with abnormal price growth. Price stability is important for investment and retirement planning.
Figure 6. Short and long term inflation expectations
Interviewing for The Roanoke College Poll was conducted by The Institute for Policy and Opinion Research at Roanoke College in Salem, Va. between August 12 and August 18, 2017. A total of 601 Virginia residents 18 or older were interviewed. Telephone interviews were conducted in English. The random digit dial sample was obtained from Marketing Systems Group and included both Virginia landline and cell phone exchanges so that all cell phone and residential landline telephone numbers, including unlisted numbers from Virginia exchanges, had a known chance of inclusion. Cell phones constituted 28 percent of the completed interviews.
Questions answered by the entire sample of 601 consumers are subject to a sampling error of plus or minus approximately 4 points at the 95 percent level of confidence. This means that in 95 out of 100 samples, like the one used here, the results obtained should be no more than 4 points above or below the figure that would be obtained by interviewing all consumers who have a telephone. Where the results of subgroups are reported, the sampling error is higher. Sampling weights were constructed using Virginia Census 2010 data by age, race and gender groups. Quotas were used to ensure that different regions of the Commonwealth were proportionately represented. The margin of error was not adjusted for design effects due to weighting.
A copy of the questions and all toplines may be found here.
The Roanoke College Poll is funded by Roanoke College as a public service.