Primerica Household Budget Index

Middle-Income Households' Purchasing Power Reaches Break-Even Level

Primerica, Inc. (NYSE: PRI), a leading provider of financial services in the United States and Canada, announced today the release of the Primerica Household Budget Index (HBI), a monthly index illustrating the purchasing power of middle-income households with incomes between $30,000 and $130,000. In November 2023, the average purchasing power for middle-income households was 100.5%, up from 99.1% in October. A year ago, the index stood at 93.7%.

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Primerica Household Budget Index (HBI) - In November 2023, the average purchasing power for middle-income households was 100.5%, up from 99.1% in October. A year ago, the index stood at 93.7%. (Graphic: Business Wire)

“During November, a significant decrease in gasoline prices and a small decrease in food prices, accompanied by continued strength in household incomes, allowed middle-income families to stem the loss of purchasing power they have experienced for several consecutive months,” said Glenn J. Williams, CEO of Primerica. “These families have consistently indicated that the cost of living is weighing on their financial security.”

In November, HBI data showed middle-income households saw modest improvements in spending power. However, since 2021, driven by the increased costs of necessity items, households experienced an average cumulative budget deficit of nearly $2,500.

“So much has happened since January 2019, and for the index to finally come back to the baseline value is a welcome outcome,” said Amy Crews Cutts, Ph.D., CBE, economic consultant to Primerica. “But it doesn’t mean that all is grand. Had the pandemic never happened, the HBI would likely be approximately 10% higher than it is now, there would be more savings accumulation for middle-income households, and middle-income families would not be carrying all the new credit card debt they incurred when inflation was roaring well ahead of earned income.”

HBI HISTORICAL BACKGROUND

The index baseline is set at January 2019 and can be thought of as when middle-income households set a budget based on their earned income at that time. Between 2014 and 2020, the HBI results recorded steady gains in purchasing power for middle-income families, with a peak of 105.1% in November 2020. This means that relative to January 2019, households were in a stronger financial position to pay their monthly bills because wage growth outpaced the cost of everyday goods. Increasing inflation then caused the index to plummet. In June 2022, it reached a post-pandemic low of 86.7%.