According to the Primerica Household Budget Index (HBI) the average purchasing power for middle-income households in September increased.
The HBI was 99.3 percent, up from 97.4 percent in August; and up from 89.3 percent from September of last year. Middle-income families are seeing their spending powers improve but are still recovering from the impact of inflation the report found.
“Wage growth outpaced the increased cost of necessities in September 2023, improving the purchasing power of middle-income households to 99.3%,” Glenn J. Williams, CEO of Primerica, said. “Although there were modest improvements in spending power this September, the cumulative effect of high inflation for several months continues to strain middle-income budgets and create stress in families.”
Looking at households with incomes between $30,000 and $130,000, and basing spending on a baseline set in January 2019, the report found households could almost purchase what they budgeted for last month. Between 2014 and 2020, HBI results showed steady gains in middle-income families’ purchasing power. In November 2020, the HBI reached its peak of 102.8 percent. In June 2022, the HBI reached a post-pandemic low of 85.4 percent.
Since the baseline of January 2019, the average middle-income household has spent around $2,683 more than budget on basic necessities, the report found. If the pandemic and inflation had not been a factor, the HBI would be closer to 110 percent, the report said.
“Over the past 18 months, families have had to dig into savings or go into debt to cover the cost of everyday necessity items,” Amy Crews Cutts, Ph.D., CBE®, economic consultant to Primerica, said. “The big bump that many middle-income households got from federal pandemic-related Economic Impact Payments is gone and with it the cushion to weather higher costs for food and utilities heading into winter. We got lucky last year with a mild winter and forecasters are expecting a similar weather pattern for this winter season, although home heating fuel is predicted to be 8% higher over the next few months and could offset this positive budget impact.”