By Nupur Anand

NEW YORK (Reuters) – U.S. consumers are starting to curb their spending in response to high prices and a worsening economic outlook, according to consumer finance company Synchrony Financial (SYF).

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, are preparing for their finances to be more stretched, said Max Axler, chief credit officer of Synchrony. Most clients are still 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.

Synchrony, which issues credit cards in partnership with retailers and merchants, has more than 100 million consumer credit accounts.

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.

The concerns about household finances have also weighed on consumer finance stocks with shares of American Express (AXP), Capital One (COF), Synchrony, (SYF) and Discover (DFS) down between 15-22% over the past month, Martinez said.