Virginia Consumer Sentiment and Inflation Expectations Report for Aug. 2025

Virginians are cautiously optimistic as sentiment stabilized in the third quarter of 2025. After months of declining confidence, residents are beginning to feel slightly better about their financial situations, buoyed by steady wage growth and a resilient labor market. However, concerns about the potential inflationary effects of tariffs continue to cast a shadow over future expectations.

Consumer sentiment in Virginia edged upward in the third quarter of 2025, recovering the ground lost between the first and second quarters. The Virginia Index of Consumer Sentiment (ICS) rose by one point to 64.6, reversing a downward trend but still marking the third-lowest reading since the index was established in 2011. This modest rebound suggests that while Virginians are feeling slightly more optimistic, concerns continue to weigh on their outlook.

The uptick in sentiment is driven by improving household finances and resilient wage growth. Nearly 22% of respondents report that their financial situation is better today than it was a year ago, and 41% say it’s a good time to purchase large, durable goods. Both figures indicate improvement from the previous quarter. Nationally, wage growth (3.7%) continues to outpace inflation (2.7%), giving consumers more purchasing power and helping to offset some of the anxiety around rising prices.

However, uncertainty remains a dominant theme. The potential inflationary effects of tariffs are fueling apprehension. Additionally, while the labor market remains relatively strong, signs of softening are emerging. For example, the job openings rate is at a healthy level (4.4%), suggesting labor demand remains strong. However, this is tempered by a rise in initial and continuing unemployment insurance claims, which may indicate growing instability for specific segments of the workforce.

A comparison with national data reinforces Virginia’s relatively stronger consumer outlook. Virginia outpaces the U.S. in all three sentiment indexes: Index of Current Conditions (65.7 vs. 60.9), Index of Consumer Expectations (63.8 vs. 57.2), and the overall Index of Consumer Sentiment (64.6 vs. 58.6). This suggests Virginians feel more confident about both their present financial situation and the broader economic outlook. Contributing to this optimism are stronger economic fundamentals in the commonwealth. Virginia’s unemployment rate stands at 3.6%, notably lower than the national rate of 4.2%. Even as expectations about the coming years remain subdued, Virginia’s relatively robust labor market helps sustain a more positive sentiment than seen nationally.

Inflation remains a top concern in Virginia. Nationally, the Consumer Price Index shows a 2.7% annual increase in prices. Virginians are increasingly worried about future price hikes. Sixty-five percent of respondents believe prices will rise over the next year, nearly 20 percentage points higher than they were a year ago.

This growing anxiety may be linked to recent price pressures on regularly consumed goods and services, such as medical care, shelter, and vehicle insurance. While inflation has moderated from its peak in the summer of 2022, the psychological impact of past price surges continues to shape consumer expectations. This is especially true because, although the rate of price growth has slowed, overall prices have not declined and remain elevated compared to the pre-pandemic levels.

Analysis  

“Virginia’s labor market continues to show resilience, but emerging indicators suggest a more nuanced picture,” said Dr. Alice Kassens, Roanoke College’s John S. Shannon Professor of Economics and senior analyst at the Institute for Policy and Opinion Research. “The job openings rate has increased, signaling that employers are still actively seeking workers and labor demand remains strong. This is a positive sign, especially in sectors like health care and professional services, where hiring remains robust.

“However, the rise in both initial and continuing unemployment insurance claims points to growing instability for certain groups of workers. This divergence (more openings but also more claims) could reflect mismatches in skills or geographic availability, or early signs of sector-specific slowdowns. For example, industries like manufacturing and logistics are facing headwinds from global trade uncertainty and shifting consumer demand. While the overall employment picture remains stable, these underlying trends are contributing to a cautious outlook among Virginia consumers.

“As we enter the final quarter of the year, it will be crucial to monitor whether these labor market tensions resolve or intensify. If claims continue to rise while job openings plateau or decline, we may see sentiment weaken further. For now, Virginians appear to be balancing optimism about current conditions with growing concern about what lies ahead.”

Methodology

Interviewing for the Roanoke College Poll was conducted by the Institute for Policy and Opinion Research (IPOR) at Roanoke College in Salem, Virginia, between Aug. 11 and Aug. 15, 2025. A total of 775 completed interviews came from random telephone calls and texts to 382 Virginians, and 393 responses were drawn from a proprietary online panel of Virginians. Interviews were conducted in English. Cellphones constituted 33% of the completed phone and text-to-web interviews.   

The phone sampling frame was provided by Marketing Systems Group, with the landline sample generated by random digit phone numbers with area and exchange code coverage in proportion to the population density in Virginia; the cellular sampling frame was randomly divided so that half of the potential respondents would receive a text message with an invitation to complete the survey on their own before we would call them. The other half would be called and interviewed over the phone by a live agent, who would send a text message afterward with an invitation if the respondent was unavailable when we called. Cint USA, Inc. facilitated the online panel with completion time and attention check questions used for quality control. 

Questions answered by the sample of 775 respondents are subject to a weighted margin of error of plus or minus 4.12% at a confidence level of 95%. This means that in 95 out of 100 samples such as the one used here, the results should be at most 4.12 percentage points above or below the figure obtained by interviewing all Virginians with a home telephone or a cellphone.

Quotas were used to ensure that different regions of the commonwealth were proportionately represented. The data were statistically weighted for gender, race, and age to match Virginia data in the 2023 one-year American Community Survey (ACS).

A copy of the questions and all toplines may be found here. 

More information about the Roanoke College Poll may be obtained by contacting Dr. Alice Kassens at kassens@roanoke.edu or the Roanoke College Marketing and Communications Office at rcnews@roanoke.edu. 

roanoke.edu/IPOR