Consumer sentiment continues to slide, driven by the rising cost of food and fuel
The Virginia Index of Consumer Sentiment (VAICS) continued to slide, falling 2.6 points over the final quarter of 2021. The index value is 72.4 this quarter, the second-lowest value on record. Concerns about the current economy are driving the loss, primarily the rising cost of food and fuel. Virginians’ worries about the future economy were stable.
Consumer sentiment fell 2.6 points over the fourth quarter of 2021 to 72.4, the second-lowest value on record. Since the start of the pandemic, the index lost almost 25 points. Nationally, the October unemployment rate was 4.6%; the rate in Virginia is 3.8%, down nearly three points over the past 12 months and well below the pandemic highs. Concerns about rising prices and reduced purchasing power drown out the good news about the rapidly recovering labor market.
Respondents from the Commonwealth are more concerned about the current economy as measured by the Virginia Index of Current Conditions (ICC). In November, the VA ICC is 66.1, almost 7.5 points below the national number and down 6.5 points since the last quarter in Virginia. Close to 28% of respondents say that their household finances are better now than a year ago, while almost 40% say they are worse off. Despite plans for robust holiday spending, over 60% of respondents believe that business conditions are worse today than a year ago.
Although sentiment is low in the Commonwealth, there is considerable optimism about the future relative to the current conditions. The Virginia Index of Consumer Expectations (ICE) is 76.5, which is 12 points above the national number and statistically unchanged since the third quarter. About 45% of respondents believe that the coming few years will witness an improved economy. Respondents are vastly more optimistic about their finances over the coming year, with almost 80% anticipating improvement.
Virginia Consumer Sentiment and Inflation Expectations Report
Virginians anticipate an increase in overall prices in 2021 and beyond, although the degree of concern moderated over the year’s second half. Both the short- and long-term price expectations remain slightly above historical averages in Virginia. Individual beliefs about prices are heavily influenced by what one regularly sees, for example fuel and food prices. Supply chain issues and labor shortages are contributing to rising prices and fueling respondents’ concerns.
“Consumer sentiment in the Commonwealth dropped since last quarter but at a much slower rate than we saw between the second and third quarter,” says Dr. Alice Louise Kassens, John S. Shannon Professor of Economics and Senior Analyst at the Roanoke College Institute for Policy and Opinion Research. “The economy continues to strengthen, with the state unemployment rate dropping to 3.8% in September. Unfortunately, concerns about rising prices are overwhelming the economy’s positive aspects, and the Omicron variant of the coronavirus might further worsen concerns through added uncertainty. Markets should continue to work out supply chain issues, and prices should eventually return to normal levels. COVID continues to be the great unknown force disturbing the economy and makes predictions all the more challenging.”
Interviewing for The Roanoke College Poll was conducted by The Institute for Policy and Opinion Research at Roanoke College in Salem, Virginia, between Nov. 7 and Nov. 17, 2021. for design effects due to weighting.
A copy of the questions and all toplines may be found on the IPOR website.