Fed Officials Warn Consumer Strain Is Creeping Up the Income Ladder

Federal Reserve Bank of Richmond President Thomas Barkin said consumer spending remains "solid" but warned that households are increasingly balking at higher prices, according to an interview published by the Wall Street Journal. Barkin added that choosier shopping habits could reduce the inflationary impact of the 145% tariff on Chinese imports that took effect in April and predicted price pressures will be "more moderate than people think." A day later, Federal Reserve Bank of Atlanta President Raphael Bostic echoed concerns about household finances, noting that financial strain is spreading from low- and moderate-income consumers toward higher-income brackets. Bostic cited rising credit-card use for everyday necessities and said small businesses appear to be under greater stress than larger firms, although upper-income consumers remain relatively stable for now. The remarks from the two regional Fed presidents highlight a widening divergence in consumer resilience that could weigh on employment and shape the central bank’s assessment of how long restrictive monetary policy must remain in place.