US consumers reduce spending due to rising inflation

U.S. consumers are reducing their spending due to high prices and concerns about the economy. According to Synchrony Financial, many Americans are taking on more debt and falling behind on payments for auto loans, credit cards, and home credit lines. Philadelphia Federal Reserve President Patrick Harker warned about potential troubles for the U.S. economy. Consumer confidence is declining, and this could indicate that households are preparing for tighter financial situations. Max Axler from Synchrony noted that while many consumers still make their loan payments, spending has decreased as they become more cautious. Consumer sentiment fell to its lowest point in nearly two and a half years in March, driven by rising inflation expectations. This has made shoppers more careful, with many waiting for sales or choosing cheaper options. Analysts caution that reduced spending may lead to more late payments and defaults on loans. The loan growth rate has slowed significantly, and banks could be affected by reduced borrowing. Consumer finance stocks have also seen declines, with companies like American Express and Synchrony losing 15-22% of their value recently. Additionally, the return of federal student loan delinquencies is expected to strain consumers further. Experts anticipate an increase in late payments as many households already face high levels of debt.