A measure of consumer confidence slumped to a four-month low in September as inflation and a deteriorating outlook for the economy weigh on people. That’s a blow given that individual spending fuels about two-thirds of the US economy, and the vast majority of Americans now have less savings than they had before the pandemic after adjusting for inflation.
Household purchasing power has already fallen, Hennes & Mauritz AB Chief Executive Officer Helena Helmersson told analysts this week, with large retailers such as Target Corp. seeing a drop in discretionary spending. It’s part of a wider realization among market participants that we may be in for a long, drawn-out default cycle as the impact of higher borrowing costs slowly works its way through the system.
Companies that need to refinance hundreds of billions of dollars of floating-rate loans stemming from the cheap-money era are increasingly tapping private credit funds for high-cost debt that lets them delay interest payments.
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