As consumer spending in America continues to fuel the economy, concerns are growing due to rising levels of consumer delinquencies. The Chicago Federal Reserve President has expressed worry about the increasing rate of missed payments on things like auto loans and credit card bills. Delinquency transition rates have risen for credit cards and auto loans, which is consistent with the idea that lower-income Americans are running out of surplus savings and turning back to credit to finance their spending. Despite a strong economy, job market, and growth in household income, economists are closely monitoring consumers’ ability to make payments as a potential indicator of economic health.
While the economy has managed to withstand high interest rates without slipping into a recession, lower-income Americans are feeling the impact more severely than higher-income individuals. This has led to changes in spending habits such as eating at home, searching for deals, and cutting back on overall spending. The ability of consumers to maintain their spending levels is crucial for the economy, and any significant weakness in consumer spending could impact the Fed’s interest rate decisions. Corporate earnings have highlighted the mixed picture of American consumers, who are resilient but also cautious with their spending habits.
Investors are eagerly awaiting the Commerce Department’s release of the first estimate of first-quarter gross domestic product, which is set to reveal the health of consumer spending. Consumer spending accounts for a significant portion of the US economy, and any changes in spending patterns could have significant economic implications. The Atlanta Fed projects a moderate growth rate for GDP in the first quarter of 2024, indicating a slight cooling but still solid economic performance. Consumer spending is expected to moderate to some extent, reflecting a balancing act between consumer resilience and cautious spending.
In another development, Trump Media & Technology Group has raised concerns about potential illegal activity affecting its share price. CEO Devin Nunes has alerted Congress to investigate potential manipulation of the company’s stock price, citing signs of unlawful activity such as naked short selling. The Swiss government has also raised concerns about UBS’s financial stability, suggesting the need for the bank to find additional capital to absorb potential losses and protect taxpayers. UBS has pushed back against these suggestions, stating that its financial position is robust and warning against regulations that could harm Switzerland’s status as a global financial center. The situation highlights the importance of financial stability and regulatory oversight in the banking industry.
