Citigroup CEO Jane Fraser spoke in an interview with CNBC on Monday, sounding the alarm about the precarious situation low-income households in the United States now find themselves in:
- see a “K-shaped consumer”
- means the rich continue to spend, while lower-income Americans have become more cautious in their consumption
The reason is that low-income American households
- have exhausted their pandemic savings
- facing high and growing debt and high interest charges on debt
The implications for the Fed are that a deterioration in the U.S. labor market will have outsized impacts on these households and could push the economy closer to recession as the belt tightens further. Widespread job losses among service workers, for example, are not worth considering.
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