SPECIAL REPORT: Even as Inflation Drops, Financial Challenges Remain for Middle-Income Families
12 Dicembre 2023 - 6:00AM
Business Wire
Compounding impact of inflation has resulted in
average cumulative household budget deficit of nearly $2,500 since
May 2021
Primerica, Inc. (NYSE: PRI), a leading provider of financial
services in the United States and Canada, released a special report
titled, “Perception vs. Reality: Examining Middle-Income
Households’ Financial Outlook Heading into 2024.”
The report finds that while the pace of inflation has moderated,
data from Primerica’s Financial Security Monitor™ (FSM™) and
Household Budget Index™ (HBI™) show it continues to affect the
financial outlook of middle-income households, whose budgets are
disproportionately impacted by the cost of necessities. In fact,
data from the HBI™, a monthly assessment of middle-income household
purchasing power, indicates the rise in the cost of food, gas,
utilities, and health care since May 2021 has created an average
cumulative budget deficit of $2,440 in family budgets. As a result,
rebuilding depleted savings and paying off debt is likely to take
several more months and potentially even several years for many
middle-income families.
The report is founded on a unique combination of consumer survey
data and modeling of official economic data, and was researched and
written by Amy Crews Cutts, Ph.D., CBE®, economic consultant to
Primerica. “The compounding impact of inflation has left a deep
mark on middle-income household finances,” Cutts said. “Over the
past few years, families have repeatedly underestimated the
economy’s impact on their finances, such as whether they would need
to use their credit cards more frequently. That’s why even as
inflation wanes, middle-income households are feeling increasingly
less confident in their financial situations.”
Given the sharp increase in the price of necessities over the
past two years, the burden of unexpected large expenses, and the
ensuing financial stress these have caused, middle-income
Americans’ outlooks are now cautious.
However, the special report highlights that middle-income
households should find themselves in a gradually improving
financial condition in 2024 so long as inflation continues to
decline, and wages continue to rise at a faster pace than the cost
of necessities.
“The higher cost of living for an extended period of time is
increasing the importance of key financial fundamentals for
middle-income families,” said Glenn J. Williams, CEO of Primerica.
“This report highlights the importance of budgeting and seeking
guidance from a financial professional, who can assist households
as they navigate financial difficulties.”
Key Findings
- Middle-income Americans’ perception of their personal
finances declined over the past year. About 48% of FSM™ survey
respondents rated their personal finances as “excellent” or “good”
in Q3 2023, a slight decline from 50% in the previous survey, and a
significant decline from 53% in 2022.
- Most are cutting back on spending, turning to credit cards
or depleting savings to adjust to higher prices: About 72% of
respondents in the Q3 2023 survey stated their incomes were not
keeping up with inflation. Among those, about 74% said they were
cutting back on nonessential purchases like entertainment or
restaurant meals, 84% were curtailing or stopping saving for the
future or dipping into their savings to cover the deficit, and 28%
said they were using their credit cards more frequently.
- Middle-income households felt pinch of inflation early in
pandemic. While wages rose faster than inflation in 2020 and
2021, respondents began indicating their income was falling behind
the cost of living by the Q4 2020 survey. Shortly after,
inflation’s rapid rise started to outpace income gains, and the
Consumer Price Index (CPI) hit a 42-year high for year-over-year
growth of 9.1% in June 2022.
- Many miscalculated the economy’s impact on their
finances. For example, middle-income Americans have
significantly underestimated their need to increase credit card
usage. Since the survey’s launch in 2020, the deviation has
averaged almost 25 percentage points, with households increasingly
using credit cards more than planned. In addition, 80% of the
respondents in the Q3 2023 survey indicated rising gas and grocery
prices have influenced their ability to stick to a budget. On a
more positive note, nearly 9% of respondents in Q2 2023 planned to
add to their savings account and 26% reported doing so.
About Primerica’s Financial Security Monitor
The Financial Security Monitor is a quarterly national survey to
monitor the financial health of middle-income households. Using
Dynamic Online Sampling, Change Research polls more than 1,000
adults nationwide with incomes between $30,000 and $130,000.
Post-stratification weights are made on gender, age, race,
education, and Census region to reflect the population of these
adults based on the five-year averages in the 2021 American
Community Survey, published by the U.S. Census.
About the Primerica Household Budget Index™ (HBI™)
The Primerica Household Budget Index™ (HBI™) is constructed
monthly on behalf of Primerica by its chief economic consultant Amy
Crews Cutts, PhD, CBE®. The index measures the purchasing power of
middle-income families with household incomes from $30,000 to
$130,000 and is developed using data from the U.S. Bureau of Labor
Statistics, the US Bureau of the Census, and the Federal Reserve
Bank of Kansas City. The index looks at the cost of necessities
including food, gas, utilities, and health care and earned income
to track differences in inflation and wage growth.
The HBI™ is presented as a percentage. If the index is above
100%, the purchasing power of middle-income families is stronger
than in the baseline period and they may have extra money left over
at the end of the month that can be applied to things like
entertainment, extra savings, or debt reduction. If it is under
100%, households may have to reduce overall spending to levels
below budget, reduce their savings or increase debt to cover
expenses. The HBI™ uses January 2019 as its baseline. This point in
time reflects a recent “normal” economic time prior to the COVID-19
pandemic.
About Primerica, Inc.
Primerica, Inc., headquartered in Duluth, GA, is a leading
provider of financial products and services to middle-income
households in North America. Independent licensed representatives
educate Primerica clients about how to better prepare for a more
secure financial future by assessing their needs and providing
appropriate solutions through term life insurance, which we
underwrite, and mutual funds, annuities and other financial
products, which we distribute primarily on behalf of third parties.
We insured over 5.7 million lives and had over 2.8 million client
investment accounts on December 31, 2022. Primerica, through its
insurance company subsidiaries, was the #3 issuer of Term Life
insurance coverage in the United States and Canada in 2022.
Primerica stock is included in the S&P MidCap 400 and the
Russell 1000 stock indices and is traded on The New York Stock
Exchange under the symbol “PRI”.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231211237258/en/
Public Relations Gana Ahn, 678-431-9266
gana.ahn@primerica.com Investor Relations Nicole Russell,
470-564-6663 nicole.russell@primerica.com
Grafico Azioni Primerica (NYSE:PRI)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Primerica (NYSE:PRI)
Storico
Da Giu 2023 a Giu 2024