Spending power improvements a positive sign,
yet financial recovery still underway
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 middle-income households
with incomes between $30,000 and $130,000. In November 2023, the
average purchasing power for middle-income households was 100.5%,
up from 99.1% in October. A year ago, the index stood at 93.7%.
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Primerica Household Budget Index™ (HBI™)
- In November 2023, the average purchasing power for middle-income
households was 100.5%, up from 99.1% in October. A year ago, the
index stood at 93.7%. (Graphic: Business Wire)
“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.
“These families have consistently indicated that the cost of living
is weighing on their financial security.”
In November, HBI™ data showed middle-income households saw
modest improvements in spending power. However, since 2021, driven
by the increased costs of necessity items, households experienced
an average cumulative budget deficit of nearly $2,500.
“So much has happened since January 2019, and for the index to
finally come back to the baseline value is a welcome outcome,” said
Amy Crews Cutts, Ph.D., CBE®, economic consultant to Primerica.
“But it doesn’t mean that all is grand. Had the pandemic never
happened, the HBI™ would likely be approximately 10% higher than it
is now, there would be more savings accumulation for middle-income
households, and middle-income families would not be carrying all
the new credit card debt they incurred when inflation was roaring
well ahead of earned income.”
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 105.1% 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 86.7%.
Since May of 2021, when the HBI™ dipped
below 100% for the first time since the pandemic, the average
middle-income household has cumulatively spent around $2,425 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%.
For more information on the Primerica Household Budget Index™,
visit www.householdbudgetindex.com.
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
Statistics, the US Bureau of the Census, and the Federal Reserve
Bank of Kansas City. 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 is above
100%, the purchasing power of middle-income families is stronger
than in the baseline period and they 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.
Periodically, prior HBI™ values may be revised due to revisions
in the CPI series and Consumer Expenditure Survey releases by the
U.S. Bureau of Labor Statistics (BLS). Beginning with the October
2023 release of the HBI™ data, health insurance costs will no
longer be included in the calculation of the HBI™ data as part of
the healthcare component because of some newly acknowledged
methodology that has been used by the BLS to calculate the health
insurance CPI. The health insurance CPI, as calculated by BLS, does
not measure consumer costs of health insurance such as the cost of
premiums paid or a combination of premiums and deductibles, but
rather premium values retained by health insurers we do not believe
it accurately reflects consumer experiences. The healthcare
component will continue to include medical services, prescription
drugs and equipment. Prior published values have been adjusted to
reflect this change.
About Primerica, Inc.
Primerica, Inc., headquartered in Duluth, GA, is a leading
provider of financial products and 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”.
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Public Relations Gana Ahn, 678-431-9266
gana.ahn@primerica.com
Investor Relations Nicole Russell, 470-564-6663
nicole.russell@primerica.com
Primerica (NYSE:PRI)
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