Primerica Releases Inaugural Household Budget Index™ (HBI™) to Illustrate Purchasing Power of Middle-Income Families
22 Agosto 2023 - 2:00PM
Business Wire
New monthly index shows middle-income families
are seeing increased spending power, yet still recovering from
previous 18-months of high inflation
Primerica, Inc. (NYSE: PRI), a leading provider of financial
services in the United States and Canada, announced today the
release of its inaugural Primerica Household Budget Index™ (HBI™),
a monthly index illustrating the purchasing power of middle-income
households with incomes between $30,000 and $130,000. The HBI™
looks at the difference between the growth in earned income and the
change in the costs for necessities like food, utilities, health
care, and gasoline to understand how the current economy is
impacting middle-income households’ ability to maintain a budget.
It also evaluates whether there are opportunities for middle-income
families to save money or pay down debt versus use savings or
increase debt.
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the full release here:
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Chart 1: Primerica HBI™ (Graphic:
Business Wire)
The HBI™ data is presented as a percentage. When the index is
above 100%, this means middle-income households 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 index uses January 2019 as its baseline. This
point in time reflects a recent “normal” economic time prior to the
COVID-19 pandemic.
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 compared 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 low of 85.6%.
In July 2023, the index rose slightly to 97.5% from 97.0% in
June 2023. See “Chart 1: Primerica HBI™.”
“Understanding the purchasing power of middle-income households
from month-to-month will make our guidance even more precise as we
serve the financial needs of middle-income families,” said Glenn J.
Williams, CEO of Primerica. “The principles we teach, coupled with
this ongoing research, will help families in their efforts to
achieve financial security.”
“The July index illustrates how deeply middle-income households
were affected by the recent period of high inflation in which their
income gains fell behind the rising cost of living expenses,” said
Amy Crews Cutts, Ph.D., CBE®, economic consultant to Primerica.
Since the baseline of January 2019, the average middle-income
household has cumulatively spent around $3,150 more than budget on
basic necessities. In line with this, if the pandemic and ensuing
inflation would not have been a factor, the HBI™ today would be
closer to 110%. See “Chart 2: Inflation versus Growth in Earned
Income for Middle-Income Households.”
“Middle-income households finally are pulling ahead, but the
last 18-months of inflation has caused many to fall behind which
accounts for the rising credit card debt we are currently seeing,”
said Cutts.
There is not currently a consistent measure to track
middle-income households’ purchasing power. While the Consumer
Price Index (CPI) provides a comprehensive measure of inflation, it
does not offer a clear picture of how the change in prices of
necessities impacts middle-income households because it is weighted
to include all income levels and aggregates expenses for rarely
purchased items, as well as expenses for which households can plan.
See “Chart 3: Comparison of Measures of Inflation: Consumer Price
Index versus HBI-weighted CPI for Middle-Income Households.”
The HBI™ removes infrequently purchased or predictable expense
items and focuses solely on the purchasing patterns of
middle-income households, defined as those with incomes of
$30,000-$130,000.
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
and the Federal Reserve. 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 above 100%,
the purchasing power of middle-income families is stronger and 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., is a leading provider of financial 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/20230822868176/en/
Public Relations Gana Ahn, 678-431-9266
gana.ahn@primerica.com Investor Relations Nicole Russell,
470-564-6663 nicole.russell@primerica.com
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