Citigroup CEO Jane Fraser said Monday that consumer behavior has changed as inflation in goods and services makes life harder for many Americans.
Fraser, who heads one of the largest credit card issuers in the United States, said she sees a “K-shaped consumer.” This means that the rich continue to spend while low-income Americans have become more cautious in their consumption.
“The big increase in spending has come in the last few quarters from wealthy clients,” Fraser told CNBC’s Sarah Eisen in an interview.
“We’re seeing a lot more cautious lower-income consumers,” Fraser said. “They feel more pressure from the cost of living, which has been high and increased for them. So even though they have jobs, their debt service levels are higher than they were before.”
The stock market has been hanging on one question this year: When will the Federal Reserve start cutting interest rates after a series of 11 hikes? Strong employment numbers and persistent inflation in some categories have complicated the picture, pushing back expectations for when policy easing will begin. This means Americans will have to live longer with higher rates on credit cards, auto loans and mortgages.
“I think, like everyone here, we hope to see economic conditions that allow rates to come down sooner rather than later,” Frazier said.
“It’s hard to achieve a soft landing,” the CEO added, using a term for a situation where higher rates reduce inflation without causing an economic downturn. “We’re hopeful, but it’s always hard to get.”
