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Headline: Citi CEO Reveals Surprising Money Secret of Low-Income Consumers Amidst Rising Inflation


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


Inflation is affecting American consumers differently, leading to a “K-shaped” pattern in spending.

The affluent continue to spend freely, while lower-income Americans are becoming more cautious.

Citigroup CEO Jane Fraser, who oversees a large credit card issuer, observes that growth in spending has primarily come from affluent customers.

In contrast, lower-income consumers are constrained by rising living expenses, making them more cautious.

Their debt servicing levels have increased, exacerbating the pressures they face.

Higher interest rates, implemented by the Federal Reserve to combat inflation, are prolonging the challenges for consumers.

Credit card debt, auto loans, and mortgages remain expensive.

Fraser expresses hope that economic conditions will allow for interest rate reductions, but acknowledges the difficulty of achieving a “soft landing,” where inflation is reduced without triggering a recession.

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    “Fraser, who leads one of the largest U.S. credit card issuers, said she is seeing a “K-shaped consumer.” That means the affluent continue to spend, while lower-income Americans have become more cautious with their consumption.”

    “”A lot of the growth in spending has been in the last few quarters with the affluent customer,” Fraser told CNBC’s Sara Eisen in an interview.”

    “We’re seeing a much more cautious low-income consumer,” Fraser said. “They’re feeling more of the pressure of the cost of living, which has been high and increased for them. So while there is employment for them, debt servicing levels are higher than they were before.”

    “The stock market has hinged on a single question this year: When will the Federal Reserve begin to ease interest rates after a run of 11 hikes? Strong employment figures and persistent inflation in some categories have complicated the picture, pushing back expectations for when easing will begin.”

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