Low-income Americans slash spending, a bad sign for the economy

Although investors cheered the Federal Reserve’s recent rate cut and the stock market has kept powering along, the economy is facing growing headwinds on one crucial front — consumer spending.

Americans’ long-running spending boom is showing signs of faltering as consumers of all income levels scale back and hold out for discounts, leaving the economy on shaky ground. This shift is most pronounced among lower-income consumers, who are disproportionately vulnerable to rising prices and other economic pressures eroding their purchasing power, industry analysts say.