Virginia Consumer Sentiment and Price Expectations

Quarterly Report
August 2015

Sentiments remain strong in the second half of 2015

US data downloaded from FRED 8/23/2015; blue line is US Consumer Sentiment;

black line is a two year moving average; orange bars are VA Consumer Sentiment

The Virginia Index of Consumer Sentiment (VAICS) is 90.4

in August, statistically unchanged since the start of 2015,
maintaining the highest value recorded since the index
began almost four years ago. Figure 2 illustrates sentiment
values for Virginia and the US over the past two years. Sentiment in Virginia is slightly lower than the preliminary national August 2015 value of 92.9, which fell for the second
month in a row and is close to six points below the post-recession high of 98.1 recorded in January 2015. An initial estimate of 2.3% growth in second quarter US GDP is driven
in part by an increase in consumer spending. The drop in
national sentiments is likely due to concerns over potential
Federal Reserve Bank actions and a volatile stock market.
The VAICS upward trend began in early 2013, save one dip
in November 2013. Growth in sentiment is stalled, albeit at
record levels. Virginia GDP is also stalled, reporting 0.0%
growth in 2014. Despite some regional setbacks, Virginians
remain more optimistic about the economy than the nation
as a whole, primarily citing increased income. The nation as
a whole is more positive about the current conditions than
the Commonwealth. The University of Michigan reported a
preliminary August 2015 current conditions value of 107.1.

Northern Virginia leads the Commonwealth

In all regions, sentiments are strong and higher for current

conditions than expectations of the coming year. Central
Virginia, Northern Virginia, and the Tidewater, the most
populated regions, report the strongest sentiments. Southwest Virginia remains positive about the current conditions despite continued closing announcements by local
employers. In August 2015, Northern Virginia, Southside,
and Shenandoah Valley demonstrated change outside of
the typical range, all in the positive direction. Southwest
Virginia continues to absorb the departure announcements
of several large employers with an insignificant change in
sentiment values.

The short-term inflation expectation fell slightly from May

to 2.2 percent, lower than the preliminary national value of
2.8 percent. The long-term inflation expectation fell to 3.9
percent, but is well above the preliminary national estimate
of 2.7 percent.

Institute for Policy and

Opinion Research
www.roanoke.edu
Dr. Alice Louise Kassens
kassens@roanoke.edu
Full report published 8/26/2015.