The American Council of Life Insurers (ACLI) released a new index that measures middle-class households’ ability to manage financial challenges and plan for a stable future. ACLI’s Financial Resilience Index analyzes key middle-class economic considerations to assess the direction and degree of change in middle-class financial resilience. By examining both cost-side and resource-side factors, the index offers a holistic picture of the drivers of financial resilience.
ACLI will release the Financial Resilience Index quarterly and use movements in the index to provide policymakers and others with insights about how middle-class America is faring.
“Helping Americans navigate financial shocks is at the heart of what life insurers do. We provide financial and retirement security to 90 million families through all stages of life,” said ACLI President and CEO David Chavern. “The Financial Resilience Index generates a holistic picture of how middle-class households are navigating costs and sustaining their resources. Life insurers are part of the solution to help households build financial resilience, and we hope the index can inform those who share that goal.”
October 2024 Financial Resilience Index Report
In Q2 2024, the Headline Index, the score used to measure household resilience, was 24.8, down 7 points from the previous quarter but up 34 points from Q2 last year. This suggests that middle-class financial resilience improved but more slowly than it has in previous quarters.
The data for Q2 indicates that inflation and cost pressures continued to moderate, but income growth decelerated. Overall, the index implies that middle-class households are growing more financially resilient, though gains are more gradual as easing cost pressures were partially offset by slowing resource growth.
In addition to the index, ACLI also released a Financial Resilience Survey – a nationally representative survey conducted quarterly by The Harris Poll – that complements the index’s economic data. The survey offers a snapshot of how middle-class households are feeling about the state of their finances. It explores how middle-class respondents understand their own financial resilience by asking questions about economic mobility, financial stressors, financial stability, and safety nets.
According to the survey, daily essentials are the top cost pressure for middle-class households, with 38% reporting they are most concerned about sustainably affording these expenses – like groceries and electricity – over the next year.
In addition, middle-class households are most concerned about financial stress from a health event (40%) or an unexpected expense greater than $5,000 (37%).
“If inflation continues to cool this should lead to further cost pressure easing,” said ACLI Chief Economist Andrew Melnyk. “The health of the labor market, however, will likely be the most important factor for middle-class financial resilience. Should the labor market remain healthy overall, middle-class households will continue to benefit from steady income. But if hiring were to slow substantially and unemployment increase, middle-class financial resilience could take a hit. As we wait to see if the economy has in fact achieved a ‘soft landing’, we are in a moment of economic uncertainty. That may be making middle-class households feel a little uneasy as they try to plan for the future.”
