As inflation eases, gas prices decrease and consumer sentiment rises, a slow but steady shift appears to be underway in middle-income Americans’ perceptions of their personal finances. While uncertainty about personal financial futures and the broader economy remains, Primerica’s Q4 2023 Financial Security Monitor™ (FSM™) found that previously negative trending sentiments are finally stabilizing after a tumultuous few years.
The data shows that middle-income Americans are split in their assessment of their personal finances heading into 2024, with exactly half (50%) reporting their situation as positive. At the same time, Primerica’s Household Budget Index™ (HBI™) shows that the average purchasing power of these households increased in the final month of 2023 to its highest level since February 2022. Additionally, while more than two-thirds (68%) of families say their income is still falling behind the cost of living, this represents a four-point improvement from September. Still, a large majority (80%) are as concerned or more concerned about their credit card debt today compared to a year ago, and two-thirds (66%) don’t know the interest rate for their credit cards.
The result is that many middle-income Americans are making debt reduction a top priority as they seek to regain control of their financial well-being. The survey found that over the coming year, families are looking to pay off consumer and credit card debt (40%), manage debt load (39%), create an emergency fund (26%), follow a budget (25%) and invest more in the future (23%).
Taking such steps is especially important as the survey found that just a quarter (25%) of middle-income Americans believe they will be better off financially in the next year, with more than one-quarter (29%) saying they will be worse off and one-third (37%) saying they will be about the same. Additionally, three-fifths (60%) are pessimistic about the economy over the next year, and more than two-thirds (69%) say it’s likely America will enter a recession. However, these numbers represent noteworthy improvements over the past year, with a higher share (24%) expressing optimism heading into 2024 compared to 19% heading into 2023. Plus, just 30% say they are taking steps to prepare for a recession heading into this year, compared with 40% heading into 2023.
“As we head into 2024, we’re seeing improvements in the financial well-being of middle-income households as the cost of necessities like gasoline and heating fuel decline and they experience real, inflation-adjusted income gains,” said Amy Crews Cutts, Ph.D., CBE®, economic consultant to Primerica. “It may take some time with steady improvements before middle-income households start to feel that they are significantly better off.”
