Primerica Household Budget Index™: Purchasing Power for Middle-Income Families Rose for Second Consecutive Month as Gas and Food Prices Declined

Rhea-AI Summary

Primerica, Inc. (NYSE: PRI) has released its latest Primerica Household Budget Index™ (HBI™) for June 2024, showing a modest improvement in purchasing power for middle-income households. The index rose to 101.0% from 100.3% in May 2024, marking the second consecutive month of increase. This improvement is primarily attributed to declining gas and food prices coupled with rising incomes.

Despite this positive trend, economic consultant Amy Crews Cutts notes that middle-income families have made progress in recovering from the high inflation period of 2021-2023. The total gain in earned incomes over necessity goods prices is approximately $45, which is described as 'barely making a dent' in the financial setback caused by previous inflation.

Positive

• Purchasing power for middle-income households increased to 101.0% in June 2024
• Second consecutive month of improvement in purchasing power
• Declining gas and food prices contributing to increased spending power

Negative

• progress in recovering from 2021-2023 high inflation period
• Total gain in earned incomes over necessity goods prices is only about $45

Insights

Financial Analyst

The Primerica Household Budget Index™ (HBI™) provides valuable insights into the financial health of middle-income American families. The modest increase from 100.3% in May to 101.0% in June 2024 suggests a slight improvement in purchasing power, primarily driven by declining gas and food prices. However, it's important to contextualize this data:

• The marginal improvement of 0.7% indicates a slow recovery pace.
• The cumulative gain of just $45 in purchasing power since November is minimal compared to the inflation-induced losses from 2021 to 2023.
• While the index surpassing 100% is positive, it merely indicates that income growth is slightly outpacing necessity costs, not necessarily overall inflation.

From an investor's perspective, this data suggests that companies catering to middle-income consumers might see a slight uptick in discretionary spending. However, the recovery is fragile and could easily be reversed by any significant price increases in necessities. Retailers and consumer goods companies should be cautious about projecting substantial growth based on this modest improvement.

The slow pace of recovery also implies that the Federal Reserve might maintain its cautious stance on interest rates, potentially impacting bond yields and stock market performance. Investors should closely monitor future HBI™ reports for trends that could signal shifts in consumer behavior and economic policy.

Market Research Analyst

The Primerica Household Budget Index™ offers a nuanced view of middle-income consumer behavior, important for businesses and investors alike. Let's dissect the implications:

• Target Demographic: The index focuses on households earning between $30,000 and $130,000, a broad swath of the American middle class.
• Spending Power Trend: Two consecutive months of increase suggest a potential shift in consumer confidence, albeit a modest one.
• Sector Impact: The decline in gas and food prices could lead to reallocation of household budgets, potentially benefiting discretionary sectors.

However, the marginal nature of the improvement ($45 total since November) indicates that consumers are likely to remain cautious. This could translate to:

• Continued preference for value-oriented brands and discount retailers
• Slow recovery in big-ticket item sales (appliances, electronics, vehicles)
• Potential uptick in small indulgences or 'affordable luxuries'

For investors, this data suggests a need for selective stock picking within consumer sectors. Companies with strong value propositions or those catering to essential needs may outperform in the near term. However, the trend is still too weak to signal a broad-based consumer recovery, warranting a cautious approach to consumer discretionary stocks.

Modest improvements in spending power a positive sign, yet financial recovery still underway

DULUTH, Ga.--(BUSINESS WIRE)-- Primerica, Inc. (NYSE: PRI), a leading provider of financial services and products 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 income between $30,000 and $130,000. In June 2024, the average purchasing power for middle-income households was 101.0%, up from 100.3% in May 2024. This marks the second consecutive month purchasing power rose for middle-income families. Declining gas and food prices while incomes continue to rise are the primary drivers for the modest improvements in spending power.

Primerica Household Budget Index™ - In June 2024, the average purchasing power for middle-income households was 101.0%, up from 100.3% in May 2024. This marks the second consecutive month purchasing power rose for middle-income families. (Photo: Business Wire)

“Although the HBI™ has been running above 100% since November, middle-income households have made little headway in making up for the run of high inflation,” said Amy Crews Cutts, economic consultant to Primerica. “In total, earned incomes have exceeded the rise in necessity goods by about $45, barely making a dent in the deep hole created by the 2021 to 2023 inflation period.”

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. For more information visit householdbudgetindex.com.

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 approximately 5.7 million lives and had approximately 2.9 million client investment accounts on December 31, 2023. Primerica, through its insurance company subsidiaries, was the #2 issuer of Term Life insurance coverage in the United States and Canada in 2023. 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/20240730980337/en/

Public Relations

Gana Ahn, 678-431-9266

gana.ahn@primerica.com

Investor Relations

Nicole Russell, 470-564-6663

nicole.russell@primerica.com

Source: Primerica, Inc.

FAQ

What is the Primerica Household Budget Index™ (HBI™) for June 2024?

The Primerica Household Budget Index™ (HBI™) for June 2024 is 101.0%, up from 100.3% in May 2024, indicating an increase in purchasing power for middle-income households.

What factors contributed to the improvement in the Primerica HBI™ in June 2024?

The improvement in the Primerica HBI™ in June 2024 was primarily driven by declining gas and food prices, while incomes continued to rise.

How much have middle-income households recovered from the 2021-2023 inflation period, according to the Primerica HBI™?

According to the Primerica HBI™, middle-income households have made progress, with earned incomes exceeding the rise in necessity goods by only about $45, which is described as barely making a dent in the financial setback caused by the 2021-2023 inflation period.

What income range does the Primerica Household Budget Index™ (HBI™) cover?

The Primerica Household Budget Index™ (HBI™) covers middle-income households with incomes between $30,000 and $130,000.