Meredith Whitney warns of US economic reckoning in Q4 as World Cup and fiscal boosts fade

Meredith Whitney warned that the US economy could face a reckoning in the fourth quarter as temporary support from the World Cup and remaining government spending begins to fade. Whitney, founder and chief executive of Meredith Whitney Advisory Group, said weekly credit card balances are growing more slowly than they were in May, suggesting consumer spending is losing momentum. Households are also absorbing higher gasoline prices, placing additional pressure on disposable income, particularly among lower income consumers. Whitney described the current environment as a tale of two economies. Semiconductor companies and wealthier households continue to perform strongly, while consumers with lower incomes are beginning to reduce spending. She said those conditions give the Federal Reserve room to leave interest rates unchanged at the conclusion of its meeting on Wednesday. “I think they will stay on hold, and they’ll probably still have this tough guy language with this hawkish language that gives them wiggle room,” Whitney said during a Bloomberg Television interview. Bloomberg Television said Whitney expects the Fed to remain on hold amid the divided economic backdrop. Markets were ...