Virginia Consumer Sentiment and Inflation Expectations Report for August 2024

Consumer sentiment jumped almost four and a half points over the summer to 74.2, reversing the skid of the second quarter. Nationally, inflation fell below 3.0% in July for the first time since March 2021, likely bolstering consumer optimism.   

A quarter of respondents report that their household finances are better today than a year ago, while 36% believe that now is a good time to buy large, durable goods, such as a refrigerator. The Virginia Index of Current Conditions (ICC) is 62.0 in the third reading of 2024, up slightly from the previous quarter and above the preliminary national value (60.9) but well below the highs before the COVID-19 pandemic. Strong economic news continues, including slowing price growth with a robust labor market and personal consumption levels. Wage growth continues to outpace inflation, giving workers more purchasing power; the overall economy, as measured by GDP, grew faster in the second quarter of 2024 than anticipated (2.8%).  
   
Thirty-seven percent of Virginians believe their household finances will improve over the coming year compared to 22% who anticipate growing challenges, while 52% percent think the coming few years will include strong economic growth. The Virginia Index of Consumer Expectations (ICE) was 82.0 in the third quarter of 2024, up almost seven points from the last quarter. Comparatively, the preliminary national ICE was 72.1 in August. The improved optimism about the near-term future indicates that consumers are becoming more confident that inflation moderation will be sustained and the economy will continue to prosper.  
   
 
Nationally, inflation fell below 3.0% in July for the first time since March 2021, despite the shelter component comprising more than a third of the national inflation Consumer Price Index, at 5.0%. The 12-month average of short-term price expectations is 2.4% while the long-term value is 3.5%; both are within the range sustained over the two years before the COVID-19 pandemic. Virginians are growing more confident in inflation moderation and price stability, which reduces worry and facilitates budgetary planning.  

Analysis    
   
"Consumer sentiment improved over the summer, likely buoyed by the continued settling of prices,” said Alice Louise Kassens, John S. Shannon Professor of Economics and Senior Analyst at the Roanoke College Institute for Policy and Opinion Research. “Consumers continue to spend, which is crucial to economic growth. Our spending makes up close to 70% of all spending in the economy, so strong spending by households is paramount for a strong economy. Virginians’ short- and long-term price expectations are consistent with where they were before the pandemic. Things are more expensive than a year ago, but wage growth outpaces inflation, giving consumers more buying power – and they are spending. Consumers are driving our economy and remain a barrier to recessionary pressures.”   
  
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. 12 and Aug. 16, 2024. A total of 730 completed interviews came from random telephone calls to 310 Virginians, and 420 responses were drawn from a proprietary online panel of Virginians. Interviews were conducted in English. Cellphones constituted 60% of the completed phone interviews.   
The landline sampling frame was created by random digit dialing, with area code and exchange coverage made proportional to population density in Virginia, and services from iconectiv, LLC, were used to remove numbers that had been ported to a cellular provider. Marketing Systems Group provided the cellular dialing frame using a combination of random digit dialing and randomly selected numbers with a Virginia billing zip code to ensure representation. Lucid, LLC, 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.  
   
Questions answered by the sample of 730 respondents are subject to a weighted error margin (including design effect) of plus or minus 4% 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 percentage points above or below the figure obtained by interviewing all Virginians with a home telephone or a cellphone. Where the results of subgroups are reported, the error margin 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 data in the 2022 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 540-375-2428 or the Roanoke College Marketing and Communications Office at 540-375-2282 or rcnews@roanoke.edu. roanoke.edu/IPOR