Why middle-income Americans feel good about their finances despite mounting economic concerns

A num­ber of sur­veys on finan­cial sen­ti­ment reveal an inter­est­ing trend: mid­dle-income Amer­i­cans are opti­mistic about their finances, even amid preva­lent eco­nom­ic uncer­tain­ties. This arti­cle will thor­ough­ly exam­ine recent sur­vey data to explore and ana­lyze the fac­tors con­tribut­ing to this pos­i­tive outlook.

Primerica Survey (April 2023)

A 2023 sur­vey by Primer­i­ca showed a notable shift in con­cerns among mid­dle-income Amer­i­cans, par­tic­u­lar­ly regard­ing health-relat­ed issues and per­son­al finan­cial secu­ri­ty. Health con­cerns, such as esca­lat­ing med­ical expens­es — ris­ing to 20% of house­hold bud­gets — and their poten­tial impact on long-term well-being, sur­passed infla­tion as the pri­ma­ry wor­ry, which had pre­vi­ous­ly been the lead­ing con­cern, and fears of a reces­sion had less­ened.

Despite a major­i­ty, or 59%, per­ceiv­ing their income as insuf­fi­cient to keep up with the cost of liv­ing, opti­mism about per­son­al finances showed a mod­est increase over the past year, with 48% of Amer­i­cans plan­ning to use their tax refunds to enhance finan­cial security.

Primerica Survey (January 2024)

Primerica’s Finan­cial Secu­ri­ty Mon­i­tor™ (FSM™) sur­vey ear­li­er this year pre­sent­ed a mixed pic­ture; how­ev­er, 50% of mid­dle-income Amer­i­cans viewed their per­son­al finan­cial sit­u­a­tion pos­i­tive­ly. Amidst ongo­ing con­cerns about infla­tion and ris­ing liv­ing costs, this was an improve­ment of 5% from pre­vi­ous years. The House­hold Bud­get Index™ (HBI™) rose to 102.5 in Decem­ber 2023, sug­gest­ing increased pur­chas­ing pow­er com­pared to ear­li­er periods. 

This rise is large­ly due to a decline in gas prices and mod­est increas­es in oth­er necessities.

On the oth­er hand, debt remained a sig­nif­i­cant con­cern, with 80% express­ing anx­i­ety over cred­it card debt and a large por­tion lack­ing aware­ness of their cred­it card inter­est rates. Despite the fact that many respon­dents (40%) were still pes­simistic about the broad­er eco­nom­ic out­look, and 60% expect­ing the econ­o­my to wors­en, mid­dle-income cit­i­zens’ opti­mism had remained sta­ble, reflect­ing a pos­i­tive per­spec­tive on their per­son­al finan­cial situations.

Santander Survey (April 2024)

In ear­ly April, 2024, the San­tander sur­vey revealed a shift in sen­ti­ment among mid­dle-income Amer­i­cans. Despite ongo­ing infla­tion, there was a grow­ing sense of finan­cial sta­bil­i­ty. The Con­sumer Sen­ti­ment Index hit a record high of 79.4 in March 2024, reflect­ing an improved out­look as infla­tion impacts mod­er­ate. The sur­vey showed that 74% of respon­dents believe they are on the right path to finan­cial pros­per­i­ty, although 60% had pre­vi­ous­ly expect­ed a reces­sion with­in a year.

Inter­est­ing­ly, 67% report­ed cut­ting major pur­chas­es, such as vaca­tions and home repairs, to man­age their bud­gets. The sur­vey also notes that many are miss­ing out on high­er inter­est rates, with 60% of respon­dents not opti­miz­ing their sav­ings oppor­tu­ni­ties in the cur­rent high-rate environment.

TruStage Survey (August 2024)

The most recent TruStage Mid­dle Mar­ket Sur­vey, con­duct­ed among 1,500 mid­dle-income Amer­i­cans — those with a house­hold income between $50,000 and $150,000 — has also shown near­ly the same trend: mid­dle-income Amer­i­cans are remark­ably opti­mistic about their per­son­al finances.

“The fact that more than half of the mid­dle mar­ket still have not seen a finan­cial advi­sor points to a broad­er chal­lenge that our indus­try must rise to, said Ter­rance Williams, CEO of TruStage.”

Although near­ly two-thirds (61%) of mid­dle-mar­ket Amer­i­cans express con­cerns about the econ­o­my — par­tic­u­lar­ly regard­ing ris­ing infla­tion (87%), high­er tax­es (84%), and the upcom­ing Pres­i­den­tial elec­tion (81%) — there are encour­ag­ing signs. Specif­i­cal­ly, 92% of respon­dents are able to cov­er their month­ly expens­es, and 55% are sav­ing at least a por­tion of their income. 

How­ev­er, the sur­vey also uncov­ered areas of con­cern. Despite finan­cial con­cerns lead­ing 58% of indi­vid­u­als to rely on sav­ings for an unex­pect­ed $1,000 expense and 28% poten­tial­ly using cred­it cards, over­all finan­cial man­age­ment remains robust. Improve­ments in finan­cial ser­vice acces­si­bil­i­ty are evi­dent as well, with 92% of respon­dents find­ing insur­ance prod­ucts acces­si­ble, and a pos­i­tive finan­cial out­look is notably strong among younger generations.

Regard­ing con­cerns such as the cost of finan­cial advi­sors, Williams said, “We need to direct­ly address these mis­con­cep­tions to ensure every Amer­i­can feels they have access to guid­ance and resources that help them con­fi­dent­ly make finan­cial decisions.”

Analyzing the Trends

The data across these sur­veys reveal a com­plex pic­ture; mid­dle-income Amer­i­cans exhib­it a remark­able lev­el of opti­mism despite pre­vail­ing eco­nom­ic chal­lenges. Many of the respon­dents say they have adapt­ed to the high-cost envi­ron­ment. They have become accus­tomed to infla­tion and high inter­est rates, adjust­ing their spend­ing and sav­ings strate­gies accord­ing­ly. This sen­ti­ment, though seem­ing­ly con­tra­dic­to­ry giv­en the high infla­tion and ele­vat­ed inter­est rates, can be under­stood through a com­bi­na­tion of adap­ta­tion to new eco­nom­ic real­i­ties, strate­gic finan­cial behav­ior, and a recal­i­bra­tion of expectations. 

Adaptation to economic conditions

Mid­dle-income Amer­i­cans have become accus­tomed to per­sis­tent high infla­tion and have adjust­ed their finan­cial strate­gies accord­ing­ly. Many Amer­i­cans, accord­ing to a recent San­tander sur­vey, have accept­ed the high-inter­est rate envi­ron­ment as the new nor­mal, which has led to a decrease in the num­ber of peo­ple expect­ing a reces­sion in the near future — from 69% to 60%. This accep­tance is a sig­nif­i­cant fac­tor in why these house­holds feel more con­fi­dent about their finan­cial sit­u­a­tion. By acknowl­edg­ing and adapt­ing to the cur­rent eco­nom­ic con­di­tions, they have almost neu­tral­ized the uncer­tain­ty that typ­i­cal­ly accom­pa­nies eco­nom­ic downturns.

This gen­er­al accep­tance is fur­ther reflect­ed in the spe­cif­ic finan­cial adjust­ments observed among mid­dle-income Amer­i­cans. Accord­ing to the San­tander sur­vey, they have adapt­ed by pri­or­i­tiz­ing essen­tial spend­ing (47%), cut­ting non-essen­tial expens­es (61%), and seek­ing alter­na­tive income streams such as gig work or part-time jobs (21%). These actions illus­trate a broad­er trend of finan­cial adjust­ment aimed at main­tain­ing sta­bil­i­ty in the face of ongo­ing eco­nom­ic challenges.

Improved financial management

Anoth­er key fac­tor con­tribut­ing to this opti­mism is the proac­tive finan­cial man­age­ment strate­gies adopt­ed by these house­holds. The same sur­vey high­light­ed that 67% of respon­dents have made deep bud­get cuts, elim­i­nat­ing major pur­chas­es such as vaca­tions and home repairs . This strat­e­gy has enabled them to bet­ter nav­i­gate the finan­cial chal­lenges posed by infla­tion and high costs of liv­ing. By cut­ting back on non-essen­tial expens­es, mid­dle-income Amer­i­cans have been able to allo­cate more resources toward sav­ings and debt reduc­tion, fur­ther boost­ing their finan­cial confidence.

Although the March sur­vey by Bankrate found that 60% of respon­dents are still earn­ing less than 3% inter­est on their sav­ings, the oppor­tu­ni­ty to move funds into high­er-yield accounts, such as cer­tifi­cates of deposit (CDs) and high-yield sav­ings accounts, offers a path to improved finan­cial secu­ri­ty. This poten­tial for high­er returns on sav­ings, even in a high-rate envi­ron­ment, is anoth­er rea­son for the cau­tious opti­mism observed among mid­dle-income Americans.

Real gains in purchasing power

The Primer­i­ca sur­veys show an increase in pos­i­tive finan­cial out­looks and con­fi­dence in finan­cial sta­bil­i­ty. This opti­mism is reflect­ed in their will­ing­ness to adjust their bud­gets and seek oppor­tu­ni­ties for finan­cial growth, such as lever­ag­ing high-inter­est sav­ings accounts. In Decem­ber 2023, the HBI reached 102.5%, indi­cat­ing that these house­holds’ pur­chas­ing pow­er had sur­passed infla­tion for the first time since Feb­ru­ary 2022 . This gain was pri­mar­i­ly dri­ven by a decline in gas prices and a slow­er increase in the cost of neces­si­ties like food and health­care. With more breath­ing room in their bud­gets, mid­dle-income Amer­i­cans have been able to man­age their finances more effec­tive­ly, which has con­tributed to a more pos­i­tive outlook.

Resilience and strategic outlook

Accord­ing to the TruStage Sur­vey, mid­dle-income Amer­i­cans’ opti­mism stems from effec­tive finan­cial man­age­ment and bet­ter resource access. This opti­mism reflects a broad­er sta­bil­i­ty and strate­gic out­look among mid­dle-income Amer­i­cans. Despite con­cerns about infla­tion and tax­es, 92% cov­er month­ly expens­es and 55% save. 50% of respon­dents in a Primer­i­ca sur­vey still express con­cerns about their finan­cial sit­u­a­tion; how­ev­er, this rep­re­sents a sta­bi­liza­tion com­pared to pre­vi­ous peri­ods of more pro­nounced pessimism. 

With few­er mid­dle-income Amer­i­cans pri­or­i­tiz­ing infla­tion as their pri­ma­ry con­cern and more focus­ing on man­ag­ing debt and oth­er finan­cial goals, it is clear that they are tak­ing proac­tive steps to secure their finan­cial future. Moreover, 

This stead­fast and adap­tive mind­set, in a nut­shell, clear­ly dis­plays how mid­dle-income Amer­i­cans effec­tive­ly man­age eco­nom­ic chal­lenges with con­fi­dence and care­ful finan­cial plan­ning, as evi­denced by these four surveys.

But per­sis­tent con­cerns about reces­sion and eco­nom­ic uncer­tain­ties are like­ly to add com­plex­i­ty to the over­all finan­cial envi­ron­ment. For mid­dle-income Amer­i­cans, main­tain­ing the same lev­el of resilience and opti­mism may become increas­ing­ly chal­leng­ing and costly.