U.S. Consumer Dynamics: Balancing Solid Demand and Rising Sensitivity to Prices

U.S. consumer demand remains steady, though households are becoming increasingly sensitive to rising prices, Richmond Fed President Thomas Barkin stated. While credit card spending remains solid, sectors like non-consumer housing show weakness. Consumers are now more inclined towards promotions and lower-cost retailers due to higher prices.

U.S. consumer demand is still solid although households are beginning to get more sensitive to prices, Richmond Fed President Thomas Barkin said on Friday.

"Real time indicators like credit card spending still seem to be solid, but not frothy," he told journalists on the sidelines of a conference at the French central bank. The non-consumer housing industry and other interest-sensitive sectors are among the few areas seeing weakness, he added.

While Barkin's business contacts were also reporting solid demand growth, consumers are becoming more responsive to promotions and seeking out cheaper private-label products and shopping at lower-cost retailers. "As you are talking to consumer products manufacturers, as you're talking to retailers, you are hearing of a customer who's still spending but making choices in the context of higher prices," Barkin said.

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