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Citi CEO Jane Fraser Says Consumers ‘More Discerning’ in Spending

retail, consumer spending

Consumers are becoming more cautious in their spending, Citi CEO Jane Fraser said Tuesday (April 30).

Speaking at the bank’s annual meeting, Fraser told shareholders that while consumers remain “healthy and resilient,” they are also becoming “more discerning in their spending patterns,” Reuters reported Tuesday. 

Consumers are making small purchases, Fraser said, adding that almost all spending growth is coming from affluent customers and there is less spending by consumers with lower credit scores, according to the report.

In addition, lower-income borrowers are struggling to keep up with loan payments, delinquency rates have topped pre-pandemic levels in all loan categories outside of mortgages, and banks are becoming more cautious about issuing credit cards and car loans, Fraser said, per the report.

In the months ahead, Citi will be monitoring delinquencies, debt levels and unemployment, Fraser said, according to the report. 

It was reported Sunday (April 28) that credit card delinquency rates fell in March but remained higher than they were a year ago or before the pandemic.

The average delinquency rate dipped from 3.09% in February to 2.92% in March, though it has risen from 2.49% a year ago and is still higher than the pre-pandemic 2.76% recorded in March 2019. 

The average net charge-off rate rose to 4.36% in March, compared to 4.24% in the previous month and 3.13% a year earlier. The pre-pandemic charge-off rate was 4.05%. 

There was also a slowdown in GDP growth in the first quarter as consumers trimmed their spending. On Thursday (April 25), the Bureau of Economic Analysis (BEA) reported that the economy grew at an annualized pace of 1.6% during the quarter, which missed estimates of around 2.5% growth and represented a significant slowdown from the fourth quarter’s annualized pace of 3.4%.

The BEA also reported that personal consumption growth declined to 2.5% from 3.3% seen in the fourth quarter, reflecting a decrease in spending on goods. At the same time, the BEA noted that the personal consumption expenditures (PCE) price index increased 3.4% compared with an increase of 1.8% in the fourth quarter of last year. 

That means inflation is rising faster than spending, indicating pressure on consumers, PYMNTS reported Thursday.