Part 5/6:
This tightening reflects deteriorating credit quality conditions, which could herald further economic stress if the trend continues.
The Reality Behind the Numbers
Despite the Federal Reserve’s optimistic narrative about consumer strength, the underlying data paints a different picture:
High levels of borrowing are masking what would otherwise be a weakening spending trend.
Consumers are borrowing against their savings to sustain expenditure.
The debt burden is becoming a significant headwind that could dampen future economic growth and lead to increased financial distress.