RC Poll: Consumer Sentiment in Virginia

As the holiday spending season approaches, Virginians have weighed in on their opinion of the economy. The Roanoke College Institute for Policy and Opinion Research (IPOR) surveyed 603 Virginians about their financial situation, general business conditions and their inclination for purchasing durable goods. Indexes of current conditions, consumer expectations, and consumer sentiment were constructed using methods similar to the popular indexes out of the University of Michigan. This is the first gauge of Virginia confidence, and it will be repeated in February 2012.

Virginians Optimistic about the Future

The IPOR developed three indexes of consumer confidence in Virginia modeled after the University of Michigan's widely publicized set of indexes measuring national consumer sentiment. The Virginia Index of Current Conditions (VAICC) considers household financial situations compared to the past year and consumers' willingness to purchase durable goods such as refrigerators and furniture. The Virginia Index of Consumer Expectations (VAICE) gauges household expectations of their finances and business conditions in the coming year. The Virginia Index of Consumer Sentiment (VAICS) is an aggregate measure of current conditions and future beliefs of Virginia households.

The November VAICC is 64, compared to the preliminary national value of 76.6. This was the highest for the national number since June, although the number is well off the 90-100 range sustained during the mild recession of 2001 and the 111.3 in the first quarter of 2007. The national number has not gone above 90 since January 2008. Specifically, 44% of Virginians felt they are worse off financially now than they were a year ago and 60% reported that they thought business conditions were worse today than they were a year ago.

The VAICE is 76, suggesting that households are optimistic that their financial situation and business conditions will improve over the next year. Nearly a third, (32%) of Virginians reported a belief that they would be better off financially a year from now. Comparably, the nation is less optimistic about the coming year. The national preliminary ICE is 56, although the national number considers expectations over the coming five years, rather than just one year from now.

The VAICS is 70, which is higher than the preliminary national value of 64.2. The national preliminary values are based on a sample of 250 to 300 consumers. The final national November values will be released November 23, 2011. Potential reasons for the greater optimism in Virginia versus the nation include a statewide unemployment rate that is 2.5 points lower than the national rate of 9.0% and per capita income that is more than 10% higher than the national average.

Optimism lower in Southside and Southwest Virginia

The economic situation varies substantially across the state. The VAICC is lowest in Southwest Virginia (55) and Southside (58), and highest in NOVA (73). Almost 59% of Southwest Virginians reported being worse off financially today compared to a year ago. Residents of Southside Virginia demonstrate optimism about the coming year, reporting a VAICE of 72, compared to 66 and 83 for Southwest and NOVA, respectively. Variations in consumer confidence reflect differences in regional economic outcomes. Unemployment rates are highest in Danville (9.5%, Bureau of Labor Statistics, September) and lowest in Charlottesville (5.4%, BLS, September), although optimism could be improving in Southside due to the considerable drop in unemployment in that region in the past year (falling from 12.0% in the summer of 2010.)

Confidence and Spending

The fourth quarter of the year is typically a big time for retail sales. Additionally, holiday travel is anticipated to increase this year. As consumers feel more confident about the future of the economy, and travel more during the holidays, the quarter could be a plentiful harvest for Virginia businesses.

Methodology

Interviewing for The Roanoke College Poll was conducted by The Institute for Policy and Opinion Research at Roanoke College in Salem, Va. between November 7 and November 15, 2011. The sample consisted of 603 residents of Virginia. The sample of phone numbers was prepared by Survey Sampling Inc. of Fairfield, Conn. and was created so that all residential and cell phone numbers, including unlisted numbers, had a known chance of inclusion. Close to 23% of respondents were contacted via cell phone.

Questions answered by the entire sample of 603 consumers are subject to a sampling error of plus or minus approximately 4 points 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 points above or below the figure that would be obtained by interviewing all consumers who have a telephone. Where the results of subgroups are reported, the sampling error is higher. Sampling weights were constructed using Virginia Census 2010 data by age, race, and gender groups.

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

Contact Name: Dr. Alice Louise Kassens, IPOR senior analyst
Contact Phone: (540) 375-2428 (office)
Contact Email: kassens@roanoke.edu