Inflation and Consumer Spending

According to a recent article from Business Insider, Americans are signing up for credit cards faster than any other time in history with a record 11.5 million new credit card accounts in the first two months of 2022.

Credit cards and new forms of payment like BNPL (Buy now, Pay Later) has kept consumer spending at a constant rate. In March 2022, the Fed raised its federal funds benchmark rate by 25 basis points, to the range of 0.25% to 0.50%. The rate hike marked the first time since 2018 that the Fed has increased rates to try to curb consumer spending and control inflation.

As interest rates goes up, and credit card balances get higher, there is strong indication that delinquencies will start to creep up again. Foreclosures numbers may soon follow. The question everyone is asking is not whether we will fall into a recession, but when or how bad?

As businesses face these challenges, it is important to remember that marketing your business through any difficult time, is still important. Budgets may reduce, but staying in front of your customers and building your brand is even more important than ever. Find creative ways to stay connected, build customer loyalty, and attract new customers.