Citigroup CEO Jane Fraser said Monday that consumer behavior varies as inflation in goods and services makes life more difficult for many Americans.
Fraser, who runs one of the largest U.S. credit card issuers, said she sees a “K-shaped consumer.” That means the wealthy continue to spend, while lower-income Americans have become more cautious about their consumption.
“A lot of the spending growth in recent quarters has come from wealthy customers,” Fraser said in an interview with CNBC’s Sara Eisen.
“We’re seeing a much more cautious low-income consumer,” Fraser said. “They are feeling more strongly the pressure of the cost of living, which has been high and rising for them. So while there are jobs for them, the debt service is higher than before.”
The stock market this year is revolving around a single question: When will the Federal Reserve begin easing after 11 rate hikes? Strong employment numbers and persistent inflation in some categories have complicated the picture and pushed back expectations for the start of easing. That means Americans will have to live longer with higher interest rates on credit card debt, auto loans and mortgages.
“I think, like everyone here, we hope that economic conditions lead to a reduction in interest rates sooner rather than later,” Fraser said.
“It’s hard to achieve a soft landing,” the CEO added, using a term for when higher interest rates reduce inflation without triggering an economic recession. “We’re hopeful, but it’s always hard to get one.”
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2024-05-06 19:22:40
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