• U.S. consumers have been curbing their spending in response to high prices and a worsening economic outlook, according to consumer finance company Synchrony Financial (SYF.N). Americans have been accumulating more debt amid strain in their finances, with delinquencies edging up for auto loans, credit cards and home credit lines, the Federal Reserve said last month.
• Philadelphia Federal Reserve President Patrick Harker has also warned that trouble may be brewing for the U.S. economy, which is showing signs of stress in the consumer sector, with consumer confidence also waning.
• The belt-tightening indicates that Americans, whose finances are broadly healthy, have been stretching their finances amid persistent inflation, said Max Axler, chief credit officer of Synchrony. Most clients are keeping up their loan repayments, he added. "Purchase volumes have gone down across the industry as consumers across all income groups become more thoughtful about spending," Axler told Reuters.
• U.S. consumer sentiment plunged to a nearly 2-1/2-year low in March as inflation expectations soared. Some economists have warned that President Donald Trump's sweeping tariffs could boost prices and undercut growth. Concerns about higher prices have driven consumers' long-term inflation expectations to levels last seen in early 1993.
• Retailers, including Target and Walmart, have said that shoppers are being careful with their spending, waiting for deals or making tradeoffs to lower-priced items. Household spending cuts could be a precursor to increasing late credit payments or loan defaults, analysts said. While default rates have remained broadly steady, spending is being watched carefully as an early indicator of deteriorating consumer finances.
• Borrowers could also become more cautious, taking out fewer or smaller loans and crimping a key source of revenue for banks. Across the industry, loan growth slowed by 5% to 12% in February versus a year earlier, HSBC analyst Saul Martinez said. "There is clearly a slowdown, and it shows that the consumer is vulnerable," Martinez said. "And for banks, slowing loan growth could result in lower net interest income and revenue," he added.

(Source: Reuters)

• In October, Canada recorded a larger-than-expected trade deficit with the world, while its surplus with its top trading partner, the United States (U.S.), fell to its lowest this year, data showed on Thursday.
• Canada's overall trade deficit narrowed to C$924Mn in October, Statistics Canada said. It was Canada's eighth consecutive monthly trade shortfall, as exports could not overtake imports despite a rise in exports for the first time since June. Analysts polled by Reuters had forecast a C$790Mn deficit in the month.
• Meanwhile, Canada's trade surplus with the U.S. specifically – which buys more than three quarters of Canada's total exports – shrank to C$6.17Bn in October, the lowest it has been this year. Exports to the U.S. fell by 2.8% on a monthly basis and 8% on an annual basis, Statscan said, adding that inbound shipments from south of its border rose 1.1% monthly and 1.9% yearly.
• Data on the shrinking surplus comes amid incoming US president Donald Trump’s threats to impose 25% tariffs on all products imported from Canada.
• Although Canada is the second biggest trading partner for the U.S., after Mexico, Trump indicated the 25% tariff would remain in effect until Canada clamped down on drugs and migrants flowing into the U.S.
• According to Shelly Kaushik, an economist at BMO Capital Markets, the threat of tariffs from the U.S. makes it difficult to predict how Canada's gross domestic product will evolve next year. She also noted that "The outlook for 2025 is clouded by trade/tariff uncertainty," However, she said the overall trade numbers for October were largely neutral in terms of its contribution to fourth quarter growth.

(Source: Reuters)