Citigroup CEO Jane Fraser spoke in an interview with CNBC on Monday, sounding alarm bells on the tenous situation low-income households now find themselves in in the US:
- seeing a “K-shaped consumer”
- means the affluent continue to spend, while lower-income Americans have become more cautious with their consumption
The background to this is that US low-income households
- have exhausted their pandemic savings
- face high and rising debt, and elevated interest charges on debt
The implications for the Fed are that a deterioration in the US labour market will have outsized impacts on such households and could move the economy closer to recession as belts are tightened further. Widespread job losses amongst service workers, for example, doesn't bear thinking about.
