Consumer spending in America has been a key driver of economic growth, but concerns are arising about the consequences of high levels of consumer debt and delinquencies. The Chicago Federal Reserve President has expressed worry about the rising rates of delinquencies for expenses such as credit card bills and auto loans. Data from the New York Fed shows that credit card debt increased significantly during the fourth quarter of 2023, and delinquency transition rates are on the rise, particularly for lower-income individuals. Economists suggest that consumers may be running out of surplus savings and turning to credit to finance their spending.
Despite strong consumer spending, the Fed’s aggressive interest rate hikes have raised concerns about Americans’ ability to keep up with their payments. Lower-income Americans, in particular, have been hit hard by inflation, leading them to cut back on spending and search for deals to make ends meet. The Fed is closely monitoring consumer spending as a slowdown could have significant repercussions for the economy. While corporate earnings have shown resilience among American consumers, there is a noticeable tightening of purse strings and a shift towards more conservative spending habits.
Trump Media & Technology Group has raised concerns about potential illegal activity driving down its share price, prompting the company to request a Congressional investigation. CEO Devin Nunes has highlighted suspicions of market manipulation, particularly involving short selling of the company’s stock. Meanwhile, in Switzerland, UBS faces pressure from the government to secure additional funds to absorb potential losses and protect taxpayers. The bank is pushing back against these demands, emphasizing its financial stability and warning against regulatory measures that could harm its position as a global financial center.
As the US prepares for the release of first-quarter GDP estimates, the Atlanta Fed projects a moderate growth rate of 2.7%. Despite some concerns about consumer spending moderation, expectations remain positive for overall economic performance. However, the rising levels of consumer debt and delinquencies continue to be an area of focus for policymakers and market observers. The impact of these factors on consumer behavior and overall economic growth remains uncertain, highlighting the need for continued monitoring and analysis in the coming months.
