Purchasing power reaches highest levels since February 2022
Primerica, Inc., a leading provider of financial services and products in the United States and Canada, released its Financial Security Monitor™ (FSM™) survey for the fourth quarter of 2023 showing middle-income Americans evenly split on the outlook for their personal finances. The FSM™ coincides with the simultaneous release of Primerica’s Household Budget Index™ (HBI™), which indicates middle-income households saw gains in purchasing power that outpaced inflation at levels not seen since February 2022 having reached 102.5% in December, up from 100.5% in November and 96.5% the same time a year ago.
“While the Consumer Price Index (CPI) saw a jump of 3.3% in December, middle-income families saw a much lower increase in the cost of necessities at 1% over last year,” said Glenn J. Williams, CEO of Primerica. “Combined with a strong increase in earned income, the HBI™ rose to 102.5% and began to give families more breathing room.”
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“Combined with a strong increase in earned income, the HBI™ rose to 102.5% and began to give families more breathing room.”
Key Household Budget Index™ Findings
In December 2023, the increase of the HBI™ to 102.5%, was driven primarily by a continued decline in gas prices (falling by 5.8%), a significant factor given the prices of other necessities saw slight increases during the same period. Food and healthcare prices increased by 0.1% and 0.4%, respectively.
“As we head into 2024, we’re seeing improvements in the financial well-being of middle-income households as the cost of necessities like gasoline and heating fuel decline and they experience real, inflation-adjusted income gains,” said Amy Crews Cutts, Ph.D., CBE®, economic consultant to Primerica. “It may take some time with steady improvements before middle-income households start to feel that they are significantly better off. Nonetheless, in the Q4 2023 Primerica Financial Security Monitor™ fewer than 70% of respondents noted that their incomes were falling behind the cost of living for the first time since the Q1 2022 FSM™ survey.”
Key Findings from Primerica’s U.S. Middle-Income Financial Security Monitor™
The latest FSM™ survey data shows that exactly half (50%) of middle-income families report their personal financial situation as being positive. While this positive sentiment was higher in December 2021, the even split indicates previously trending negative perceptions are stabilizing.
- Middle-income Americans continue to be split in their assessment of their personal finances. Exactly half (50%) say their personal financial situation is excellent or good, with the other half saying it is either not so good or poor. In addition, a large majority (80%) are as concerned or more concerned about their credit card debt today compared to a year ago, and two-thirds (66%) don’t know the interest rate for their credit cards.
- Majority of middle-income Americans remain pessimistic about the state of the economy. Overall, three-fifths (60%) are pessimistic about the economy over the next year. Broken out by age group, this includes nearly two-thirds (63%) of respondents ages 18 to 34 and nearly three-quarters (72%) of those ages 35 to 49. However, a slightly higher share (24%) say they are optimistic heading into 2024 compared to the December 2022 survey, when just 19% expressed optimism heading into 2023.
- Many are prioritizing reducing and managing debt in the coming year. When asked for their 2024 financial resolutions, more middle-income Americans mentioned paying off consumer and credit card debt (40%) and managing debt load (39%) than tasks like creating an emergency fund (26%), creating and sticking to a budget (25%) and investing more in the future (23%). Less than one-quarter (22%) say they don’t make or follow resolutions. When forced to choose one, paying off credit card debt (35%) outpaced managing debt load (18%).
- Lack of time and anxiety are the main drivers in lack of financial planning. More than a quarter (26%) say they don’t contribute to a savings account, follow a budget, contribute to an investment account or set a financial budget each month. Anxiety (30%) and not having time (20%) continue to be cited as the biggest challenges people have tracking their financial information.
Primerica Financial Security Monitor™ (FSM™) Topline Trends Data
|
|
Dec. 2023 |
Sept. 2023 |
Jun. 2023 |
Mar. |
Dec. 2022 |
Sep. 2022 |
Jun. |
Mar. 2022 |
Dec. |
|
How would you rate the condition of your personal finances? (Reporting “Excellent” and “Good” responses.) Analysis: Respondents remain split on their assessment of their personal finances. |
50% |
49% |
50% |
52% |
53% |
53% |
54% |
60% |
64% |
|
Overall, would you say your income is…? (Reporting “Falling behind the cost of living” responses.) Analysis: Concern about meeting the increased cost of living dropped over the last three months of 2023. |
68% |
72% |
71% |
72% |
72% |
75% |
75% |
67% |
68% |
|
Do you have an emergency fund that would cover an expense of $1,000 or more (for example, if your car broke down or you had a large medical bill)? (Reporting “Yes” responses.) Analysis: The percentage of Americans who have an emergency fund that would cover an expense of $1,000 or more has remained relatively steady over the past year. |
60% |
62% |
61% |
58% |
59% |
60% |
61% |
62% |
60% |
|
How would you rate the economic health of your community? (Reporting “Not so good” and “Poor” responses.) Analysis: Respondents’ rating of the economic health of their communities has remained relatively steady over the past year. |
57% |
55% |
54% |
59% |
53% |
55% |
58% |
52% |
50% |
|
How would you rate your ability to save for the future? (Reporting “Not so good” and “Poor” responses.) Analysis: More than 70% continue to feel it will be difficult to save for the future. |
73% |
71% |
71% |
73% |
74% |
73% |
72% |
66% |
62% |
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