Gary Cohn says Americans’ savings are shrinking — CBS News
In the United States, IBM Vice Chair Gary Cohn said consumer sentiment has worsened due to rising energy prices, inflation and uncertainty surrounding artificial intelligence. At the same time, he said Americans have not yet cut spending, drawing on their own savings.
As CBS News reports, Cohn linked consumers’ concerns primarily to rising prices for gasoline, diesel fuel and other energy products. He noted that diesel also affects food prices, as it is used by farmers in growing, harvesting and delivering products, as well as by the transportation network.
Economic indicators and sentiment
In Cohn’s assessment, the overall indicators of the US economy remain stable. He mentioned GDP, employment and consumer spending, calling these indicators good or very good. At the same time, he said Americans are pessimistic about their own financial situation over the coming month, quarter or year.
Cohn also said that real wage growth has turned negative in recent months: wage increases are lagging behind inflation, reducing purchasing power. According to him, people are spending savings to maintain their usual level of consumption, but such resources are not unlimited.
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Fed rate hike
Commenting on the Federal Reserve’s decision to raise its rate by 25 basis points, Cohn said it did not come as a surprise to him. He recalled the Fed’s mandates on employment and price stability and noted that the regulator’s chair, Kevin Warsh, had repeatedly spoken about fighting inflation. According to Cohn, inflation had remained at a level close to 3%.
In Cohn’s view, a rate hike cannot increase the supply of oil, gasoline or diesel, but it makes borrowing more expensive and is intended to curb demand. He added that after the Fed’s decision, yields on long-term securities declined, so rates on mortgages, auto loans and credit cards did not rise or decreased.
The CBS News host also mentioned US Treasury Secretary Scott Bessent’s purchase of $5 billion in government debt. Cohn said that Bessent’s actions and Fed policy are aimed at lowering the cost of long-term borrowing, but stressed that ultimately the US Congress must reduce spending.
