Study: Middle Income Families See Spending Power Improvement in 2024
Written by
Katie Wudel
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There has been a noticeable shift in the financial environment, particularly for middle-income families. The latest data from Primera indicates a slight uptick in the purchasing power of these households, a welcome change from the trends observed over the past months.
This improvement, reflected in the increased percentages of purchasing power, suggests a subtle easing in financial pressures. However, despite this positive development, middle-income families continue to navigate a myriad of financial challenges. The rise in purchasing power brings a glimmer of hope, yet it underscores the ongoing struggle with rising living costs and budget constraints.
A Rise in Purchasing Power
Consumers are feeling a little relief when it comes to spending. In November 2023, middle-income households had an average purchasing power of 100.5%, up from 99.1% the previous month, according to the Primerica Household Budget Index. One year ago, the purchasing power for households in this income category was roughly 93.7%.
Middle-Income Families Continue To Face Challenges
Primerica’s Household Budget Index is a tool for measuring the purchasing power of households earning between $30,000 and $130,000 annually. Although November’s data revealed slight improvements in spending power, households still have some financial challenges. Due to rising costs, households have seen an average cumulative budget shortfall of roughly $2,500 Since 2021.
“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, in a statement. “These families have consistently indicated that the cost of living is weighing on their financial security.”
How Middle-Income Families Can Grow Their Wealth
To grow wealth, middle-income families should focus on effective budgeting and expense management to reduce debt and increase savings. Prioritizing the payoff of high-interest debts and building an emergency fund covering three to six months of expenses are vital steps.
Investing in diversified assets like stocks, bonds, or real estate, and contributing to retirement accounts like 401(k)s or IRAs can help grow wealth over time. Also, seeking professional financial advice can tailor strategies to individual family needs and goals. Investing in personal education and career advancement can also lead to higher income and financial stability.
About Primerica’s Household Budget Index
The Primerica Household Budget Index (HBI), developed by economic consultant Amy Crews Cutts, measures the purchasing power of middle-income families in the United States. It utilizes data from various U.S. bureaus and the Federal Reserve Bank of Kansas City, analyzing the cost of essentials like food, gas, and healthcare against income to assess changes in inflation and wage growth.
The HBI is expressed as a percentage, with values above 100% indicating stronger purchasing power than the baseline period of January 2019, which is considered a “normal” economic time before the COVID-19 pandemic. A score below 100% suggests households might need to cut spending, save less, or increase debt to manage expenses.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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