Virginia Consumer Sentiment and Inflation Expectations Report for May 2025

Consumer sentiment slid another point, continuing the 13-point drop last quarter, to 63.6, the second-lowest reading in series history. The pessimism is driven by uncertainty, particularly revolving around the effects of tariffs. The labor market remains strong, as does consumer spending. However, continued flagging consumer sentiment could manifest in reduced spending and a shrinking economy.

The Virginia Index of Consumer Sentiment declined to 63.6 in the second quarter of 2025, marking a continued downward trend and the second-lowest reading since the index was established in 2011. 

The sustained decline, now totaling 14 points over two quarters, reflects growing unease, particularly surrounding the economic implications of tariffs. Despite a resilient labor market and steady consumer spending, the persistent erosion in sentiment signals potential headwinds for the broader economy. If this pessimism translates into reduced household consumption, it could dampen economic momentum in the latter half of the year.

About 20% of respondents report that their household finances are better today than a year ago, while 37% believe now is a good time to buy large, durable goods like refrigerators. Some respondents noted that now is a good time to purchase such items before the expected inflationary effects of tariffs. Wage growth (3.8%) continues to outpace inflation (2.3%), giving workers more purchasing power. The Virginia Index of Current Conditions is 60.8 in the second reading of 2025, down 2.2 points since the first quarter of 2025, but three points above the national reading. 
  
Thirty percent of Virginians believe their household finances will improve over the coming year, compared to 32% who anticipate growing challenges. Meanwhile, 39% think the coming few years will include strong economic growth, compared to 59% who believe it will be an economically trying period. The Virginia Index of Consumer Expectations was 65.4 in the second quarter of 2025, essentially unchanged from last quarter. Comparatively, the national index was 46.5, down almost 18 points during the previous three months, indicating Virginians believe themselves in a better situation than their peers.

Nationally, inflation is 2.3%, as measured by the Consumer Price Index. While price expectations about the short-term (next 12 months) and long-term (next 5-10 years) are essentially unchanged since the last quarter, concern is greater for the next 12 months. Despite months of easing inflationary fears in the commonwealth over 2024, the inflationary effects of tariffs are keeping short-term inflation expectations elevated. These concerns can have a chilling effect on the economy as consumers and businesses experience difficulty in financial planning.  

Analysis  

“Consumer sentiment in Virginia continues to erode, reaching its second-lowest level on record,” said Dr. Alice Louise Kassens, Roanoke College’s John S. Shannon Professor of Economics and senior analyst at the Institute for Policy and Opinion Research. “While the labor market remains strong and wage growth is outpacing inflation, uncertainty is weighing heavily on consumers, particularly around tariffs. This uncertainty is reflected in both short- and long-term inflation expectations, which remain elevated despite recent easing in actual inflation rates.”

“Consumer spending, which drives nearly 70% of economic activity, has remained robust, albeit tempered. However, if sentiment continues to decline, we may see a pullback in spending that could slow economic growth or even trigger a recession. The divergence between Virginia and national sentiment, where Virginia remains more optimistic, suggests regional resilience, but that could be tested if inflationary and uncertainty pressures persist. As we move into the second half of 2025, the trajectory of consumer sentiment will be a key indicator to watch.” 

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 May 12 and May 19, 2025. A total of 719 completed interviews came from random telephone calls and texts to 373 Virginians, and 346 responses were drawn from a proprietary online panel of Virginians. Interviews were conducted in English. Cellphones constituted 38% 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. 

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). The design effect was 1.994.  
  
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 Louise Kassens at kassens@roanoke.edu or the Roanoke College Marketing and Communications Office at rcnews@roanoke.edu. 

roanoke.edu/IPOR