Impact of Inflation and Interest Rates on Consumer Spending

Americans are delaying big-ticket purchases as inflation and interest rates rise, affecting various industries and signaling a potential slowdown in consumer spending. Companies across sectors are feeling the impact, with consumers becoming more price-sensitive and credit card delinquencies rising. The Federal Reserve may interpret this as a sign to tighten the economy, potentially leading to lower interest rates.

Rising Credit Card Delinquencies

Credit card delinquencies are on the rise, with nearly a fifth of borrowers maxed-out, according to a report from the New York Federal Reserve. Household debt rose by $184 billion in the first quarter of 2024, reaching $17.69 trillion. Delinquency rates increased for credit card and auto loans, with younger borrowers and those in low-income areas being more affected.