holiday gifts in festive bags
By Dr. Alice Kassens

Va Consumer Sentiment and Inflation Expectations Holiday Report

Consumers are confident heading into the holiday spending season

The Virginia Index of Consumer Sentiment again rebounded from a spring and summer slowdown, increasing by two points to 93.5, finishing a point and a half above the historical average. The improvement is driven by consumer expectations about the strength of the economy in the near-future. Thirty-nine percent of respondents believe that the next few years will be a period of strong economic growth and prosperity.

Figure 1. Virginia Consumer Sentiment, past two years (black=VAICS, blue=5-year historical VAICS average)

The figure is a bar chart showing the Index of Virginia Consumer Sentiment each quarter for the last two years and a line noting the historical average of the metric.

Figure 1 shows that sentiment is significantly lower than last November but reversing a six-month slide. Consumer confidence gains signal a strong holiday shopping season. Fifty-nine percent of respondents believe that now is a good time to buy large ticket items since good deals are available and 37 percent report improved finances over the past year. Additionally, 42 percent anticipate improved finances over the coming year. 

Figure 2. November 2019 Virginia and U.S. Indexes of Current Conditions, Consumer Expectations, and Consumer Sentiment (left to right)

The figure is a bar chart showing the three sentiment measures (current conditions, expectations, and overall sentiment) for both the US and Virginia in August 2019.

Virginia parallels the United States’ consumer sentiment strength as illustrated in Figure 2. The national November value is 96.8, slightly above that in the Commonwealth. Nationally consumer sentiment is averaging values not seen since the robust times of 1998-2000. Despite impeachment and tariff talk monopolizing the news cycle, consumer purchasing is driving a strong economy as unemployment and prices are low and incomes are rising. Additionally, stock markets are at record levels, increasing household wealth. Consumers are, in turn, opening their wallets.

Figure 3 shows the three consumer sentiment measures. The Virginia Index of Consumer Expectations is 89.2 up four points since August. Consumer confidence in the future of the economy outweighs the slight reduction in the Virginia Index of Current Conditions which is 100.4, down just over two points since August.

Figure 3. Five-year historical values for three Virginia indexes

The figure is a time series of the five-year historical values for the three sentiment measures (current conditions, expectations, and overall sentiment.)

Holiday Spending Outlook

With a robust economy full of confident consumers, it is not surprising that respondents anticipate generous holiday spending. As shown in Figure 4, over 60 percent believe that they will spend between $100 and $1,000 on gifts and 16 percent plan spending at least $1,000. For 18 percent of respondents that is more than they spent last year. Thirty-eight percent of respondents plan to spend the same amount as last year. Over sixty-three percent report that they plan on paying for their purchases with cash, although only about one third will make any of those purchases on ‘Black Friday.” The rest will shop later, 37 percent of which will be online.

Figure 4.  Anticipated amount of holiday spending by Virginians

A bar chart showing the share of respondents who will spend in various monetary categories.

Figure 5.  Holiday spending compared to last year

A bar chart showing categories of how much respondents will spend compared to last year.

Influenced by the prices they see at places like the gas pump and the grocery store, respondents lowered their short- and long-term inflation expectations considerably since May. Over the next year, they believe inflation, the rate of price growth, will be 2.4 percent per year, down almost a full percentage point since May. Looking to the next five to ten years, respondents downgraded their inflation expectations from 3.9 percent in May to 3.5 percent in November. Combined with their belief in an increasingly improved financial situation, anticipated low prices will strengthen consumer purchases.

Figure 6. Short- and long-term inflation expectations

The figure is a time series graph of short- and long-term inflation expectations for the last two years.

The Virginia Consumer Sentiment and Inflation Expectations Report is sponsored by Atlantic Union Bank. 


“Despite the resoundingly negative news cycle which is focusing on impeachment and tariffs, consumer incomes and wealth are rising,” Dr. Alice Kassens, senior analyst for IPOR, said. “People are extremely confident in the U.S. economy. Unemployment is low, prices are low and stable, and incomes are rising. The stock market is ripping off numbers never seen before increasing household wealth. The U.S. economy is growing thanks to consumer spending but that positive story is not highlighted on the evening news. Consumers are quietly talking with their wallets, largely shrugging off other issues many see as unimportant to their daily lives.”


Interviewing for The Virginia Consumer Sentiment and Inflation Expectations Report was conducted by The Institute for Policy and Opinion Research at Roanoke College in Salem, Va. between November 10 and November 21, 2019. A total of 609 Virginians were interviewed. Telephone interviews were conducted in English.

The landline sample consisted of random-digit numbers generated in proportion to the Virginia population so that all residential telephone numbers, including unlisted numbers, had a known chance of inclusion. Cell phone samples were purchased from Marketing Systems Group and Call Delivery Systems. Cell phones comprised 55 percent of the completed interviews.

Questions answered by the entire sample of 609 respondents are subject to a sampling error of plus or minus approximately 4.2 percent 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 4.2 percentage points above or below the figure that would be obtained by interviewing all Virginians who have a home telephone or a cell phone.  Where the results of subgroups are reported, the sampling error is higher.

Quotas were used to ensure that different regions of the Commonwealth were proportionately represented. The data were statistically weighted for gender, race, and age. Weighting was done to match Virginia census data. The margin of error was not adjusted for design effects due to weighting.

A copy of the questions and all toplines may be found on the IPOR page.

For more about the Institute for Public Opinion Research, click here

Contact Name: Dr. Alice Louise Kassens, Senior Analyst, IPOR
Contact Phone: (540) 375-2428 Office
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