Washington DC [US], June 4 (ANI): Consumers in the United States are increasingly relying on credit cards, making fewer retail visits and focusing more on essential purchases as affordability pressures rise amid the ongoing crisis in West Asia, according to the latest Federal Reserve Beige Book report.
According to the report, economic activity increased at a slight to moderate pace in ten of the twelve Federal Reserve Districts, while one district reported a slight decline and another reported no change.
The report noted that consumer spending remained mixed across districts and showed growing differences across income groups as affordability concerns continued to influence spending patterns.
'There were reports of increased credit card usage, fewer retail visits, and stronger demand for necessities,' the report stated.
The Federal Reserve noted that higher-income households remained relatively resilient and were less affected by rising prices. In contrast, middle-income consumers were becoming more cautious in their spending decisions.
The report described middle-income households as 'squeezing more life out of every dollar before deciding to spend it,' while lower-income consumers were reported to be facing greater financial strain.
The impact of affordability concerns was also visible in the automobile sector.
According to the report, auto dealers reported softer demand for new vehicles as consumers reacted to higher costs and fuel prices. At the same time, many buyers were shifting toward used vehicles and hybrid models as a way to manage expenses.
While consumer spending showed signs of weakness, manufacturing activity remained relatively stronger.
The report said manufacturing activity increased at a modest to strong pace in nine districts, while only one district reported a slight decline compared to the previous reporting period.
Banking conditions were generally stable across most districts. However, several districts reported rising delinquencies in residential mortgages, consumer loans and agricultural loans.
The agricultural sector continued to face challenges as higher fuel and fertiliser costs added to cost pressures. According to the report, agricultural conditions were either unchanged or weakened across most districts.
The report said expectations for growth over the next six months remained largely unchanged, as elevated uncertainty and signs of weakening consumer spending continued to weigh on business sentiment.
The findings suggest that while overall economic activity in the United States continues to expand, households are becoming increasingly cautious with spending amid higher costs and uncertainty linked to global developments, including the ongoing crisis in West Asia.
The Federal Reserve Beige Book is published eight times a year. This provides a snapshot of economic conditions across the United States through feedback gathered from businesses and economic contacts across the country's Federal Reserve districts. (ANI)
