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Monday, July 09, 2007

Citigroup Concerned about Consumer

by Calculated Risk on 7/09/2007 10:48:00 AM

"The contagion and contamination I'm most concerned about is what effect this will have on the consumer."
William Rhodes, senior vice chairman at Citigroup Inc. in New York.
From Bloomberg: U.S. Rebound May Be Bumpier Than Fed Expects as Credit Tightens
The biggest worry is that falling home prices and rising interest rates will undermine consumer spending, the bedrock of the economy.

Consumers are showing some signs of stress. They fell behind on loan payments in the first quarter at the highest rate since 2001, the American Bankers Association reported.

Retailers feel the fall-out. The International Council of Shopping Centers and UBS Securities last week cut their forecast for June sales growth at retailers to 1.5 to 2 percent, from 2 percent.

``It's soft,'' says Michael Niemira, chief economist at the council. ``More retailers are feeling that something has changed after years of pretty healthy demand.''