Citigroup CEO Jane Fraser says low-income consumers have turned far more cautious with spending

Citigroup’s CEO has observed a divergence in consumer behavior amidst rising inflation. The CEO referred to this as a “K-shaped consumer,” with affluent individuals continuing to spend while lower-income Americans become more cautious with their consumption. The growth in spending has been primarily driven by the affluent. On the other hand, lower-income consumers are feeling the pressure of the high cost of living, leading to increased debt servicing levels. The delay in easing interest rates by the Federal Reserve means Americans will have to bear higher rates for credit card debt, auto loans, and mortgages. The hope is to see economic conditions that will allow rates to come down sooner. However, achieving a soft landing is challenging.