Rising Gas Prices Continue to Limit Purchasing Power of Middle-Income Households

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 U.S. middle-income households with incomes between $30,000 and $130,000. In August 2023, the average purchasing power for U.S. middle-income households was 97.4%, down from 97.5% in July 2023. A year ago, in August 2022, the index stood at 88.6%. The slight decrease this month shows that middle-income budgets are still stressed and saving for the future, while eliminating debt remains a challenge.

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Primerica Household Budget Index - In August 2023, the average purchasing power for U.S. middle-income households was 97.4%, down from 97.5% in July 2023. A year ago, in August 2022, the index stood at 88.6%. The slight decrease this month shows that middle-income budgets are still stressed and saving for the future, while eliminating debt remains a challenge. (Graphic: Business Wire)

“The fragile financial condition of middle-income families experienced continued stress in August,” said Glenn J. Williams, CEO of Primerica. “Both gas and food costs rose, impacting the increase in purchasing power occurring since last June. Even small changes in the costs of necessity items can put families in the position of having to take on more debt or not being able to save as much for the future.”

“The cumulative impacts of inflation have been severe for middle-income households and go a long way to explaining why consumer sentiment is so low and credit card debt so high,” said Amy Crews Cutts, Ph.D., CBE, economic consultant to Primerica. “Although worker compensation has been rising, it has not risen as fast as inflation in the cost of everyday necessity items for which middle-income households have little room in their budgets to accommodate.”

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 102.8% 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 85.4%.