Virginia Consumer Sentiment and Inflation Expectations Report for Feb. 2025

Consumer sentiment plunged almost 13 points, down to 64.7, to start 2025, the second-lowest reading in series history. The drop is driven by uncertainty and renewed inflationary concerns. The labor market remains strong, as does consumer spending. However, if consumer sentiment continues to flag, it could manifest in reduced spending and a shrinking economy. 

Almost a quarter of respondents (23%) report their household finances are better today than a year ago. At the same time, 38% believe now is a good time to buy large, durable goods like refrigerators. The Virginia Index of Current Conditions (ICC) is 63.0 in the first reading of 2025, down 8.5 points since the fourth quarter of 2024 and slightly below the national reading. Although the labor market remains strong, uncertainty is rising, particularly surrounding inflation. Nationally, wage growth (4.1%) continues to outpace inflation (3.0%), giving workers more purchasing power. However, U.S. consumers report concern regarding the impact of tariffs on the prices of goods they typically purchase.  
 
Thirty-four percent of Virginians believe their household finances will improve over the coming year while an equal number (34%) anticipate growing challenges. Thirty-eight percent think the coming few years will include strong economic growth. The Virginia Index of Consumer Expectations (ICE) was 65.8 in the first quarter of 2025, down almost 16 points from the last quarter. Comparatively, the national Index of Consumer Expectations was 64.0 in February. Renewed inflation fears are behind the considerable drop in expectations about the coming years.

Nationally, inflation is 3.0%, as measured by the Consumer Price Index. However, price expectations about the short term (next 12 months) and long term (next 5-10 years) have ticked up since the last quarter, suggesting consumers are apprehensive about policy inflationary effects. This comes after months of easing inflationary fears in the commonwealth. These concerns can have a chilling effect on the economy as consumers and businesses experience difficulty in financial planning.   

Analysis    
   
"Consumer sentiment crashed to kick off 2025, dropping to the second-lowest level in series history and the lowest since May 2022, which was during the peak of the post-pandemic inflation,” 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.  
 
"Consumers continue to spend, which is crucial to economic growth,” Kassens said. “Wage growth currently outpaces inflation, encouraging purchasing. Household spending makes up close to 70% of all economic activity, so strong consumer demand is paramount for a strong economy. If consumers cut back because of actual or expected inflationary pressures, the economy will contract and potentially move into a recession.” 
 
“Virginia's short- and long-term price expectations jumped in the first quarter of 2025, largely due to uncertainty about tariffs and their resulting inflationary effects. As goes the consumer, so goes the economy. If lagging consumer sentiment persists and manifests in reductions in consumer spending, we could be facing a challenging 2025.”   
  
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 Feb. 17 and Feb. 20, 2025. A total of 723 completed interviews came from random telephone calls and texts to 389 Virginians, and 334 responses were drawn from a proprietary online panel of Virginians. Interviews were conducted in English. Cellphones constituted 39% 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. IPOR regularly uses bootstrap analysis of post-survey results to control for quality within the blended frames. 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 poll may be obtained by contacting Dr. Alice Kassens at kassens@roanoke.edu or the Roanoke College Marketing and Communications Office or rcnews@roanoke.edu. 
 
roanoke.edu/IPOR