SURVEY: Middle-Income Americans’ Primary Concern Shifts Away From Inflation

For the first time since 2021, health topped inflation as the main worry

Primerica, Inc., a leading provider of financial services in the United States and Canada, released the Middle-Income Financial Security Monitor — a national survey that measures changes in the sentiments of middle-income families in the U.S. about their finances — for the first quarter of 2023.

“As the nation heads further into 2023, middle-income Americans are showing increasing confidence in their personal finances and are adapting to the current economic climate”

For the first time since 2021, health ranked as the No. 1 concern (35%) among middle-income households, topping inflation (32%), which dropped five percentage points from the previous survey in the fourth quarter of 2022. Recession fears also declined, falling four percentage points to 21%, and coming in below worries about finances (27%), paying for food and groceries (25%) and saving for retirement (22%).

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Overall, middle-income Americans are slightly more optimistic about their personal finances this quarter (20%) compared to in the fourth quarter of 2022 (15%), but the majority (53%) remain pessimistic about the economy as a whole, saying it will be worse off a year from now. In addition, nearly three-quarters (72%) say their income is falling behind the cost of living.

“As the nation heads further into 2023, middle-income Americans are showing increasing confidence in their personal finances and are adapting to the current economic climate,” said Glenn J. Williams, CEO of Primerica. “While concerns about inflation are ebbing, higher costs continue to place strains on budgets causing families to prioritize more than ever. Our survey results highlight that financial security is key to navigating the ever-changing economy and that guidance and expertise can help guide households to better financial security.”

With tax season well underway, a majority (60%) expect to receive a tax refund this year, although more than one-third (35%) expect it to be less than last year. Those expecting a refund plan to use the money to pay bills (37%), pay down debt (34%) and add to their savings accounts (33%).

“As middle-income families file their taxes this month, these survey results show that they’re already planning to use their refunds to build financial security, putting themselves in a strong position as they work to achieve their financial goals,” said Amy Crews Cutts, Ph.D., CBE®, economic consultant to Primerica.

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Key Findings from Primerica’s U.S. Middle-Income Financial Security Monitor

• Families are spending less money than a year ago. About two-fifths (40%) of respondents say they spent less money in the past year — an 8 percentage point increase from this time last year, and a quarter (28%) have added to savings account. However, about one-third (36%) dipped into their personal or retirement savings.
• Emergency funds are stagnating. The percentage of respondents who say they have an emergency fund of $1,000 or more has remained relatively even over the past year. In the most recent survey, more than half (58%) of respondents indicated they’d set money aside, a decline of just two percentage points from one year ago. Meanwhile, two-fifths (42%) do not have an emergency fund that would cover an expense of $1,000 or more, and nearly half (49%) tapped this fund in the past year.
• More are looking to change jobs. About one-quarter (25%) of respondents say they are at least somewhat likely to change jobs this year, an increase of five percentage points from the previous survey.
• Credit card use remains high, but key areas drop. Middle-income Americans continue to rely on credit cards for everyday purchases, including gas (53%), retail (52%) and groceries (48%). More than one-third (36%) report using their credit cards more often in the past year, up 9 percentage points from March 2022. However, fewer households say their credit card debt has increased in the past three months, dropping four percentage points to one-third (33%) of respondents. In addition, the number of respondents who say they have no credit card debt has increased to nearly one-quarter (24%), up two percentage points from the fourth quarter of 2022.

“When the Federal Reserve Bank of New York issues it’s Q1 Household Debt and Credit report in May, many expect credit card debt will hit $1 trillion for the first time,” continued Mr. Williams. “Our data suggests the middle market’s reliance on credit cards may be slowing, but households continue to rely on credit cards for everyday purchases. More than ever, they need a plan to help them get out of debt.”