This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

3 Hardest-Hit Industries If U.S. Goes Off Fiscal Cliff

NEW YORK (TheStreet) -- Even when President Obama and Republicans finally agree to terms to avoid the so-called fiscal cliff, taxes are sure to rise.

And that means certain industries -- particularly those that sell discretionary goods such as cars and jewelry -- are likely to feel the pain as consumers tighten up their purse strings.

Consumers are paying close attention to what's happening in Washington. According to a Gallup poll, 62% of Americans are following the fiscal cliff budget negotiations "very or somewhat closely." The poll was conducted via phone interviews of 1,022 adults over the weekend.

More than two-thirds of respondents say increases in federal income and Social Security payroll taxes along with major cuts in domestic spending would hurt the country. And 68% say if government leaders fail to agree and the fiscal cliff measures take effect, their personal financial situation would worsen.

"Without a doubt, nearly all Americans will see the effects of the fiscal cliff in their wallets. A complete elimination of recent tax cuts could lead the nation to a double-dip recession, as consumers significantly reduce their spending and create a drag on GDP," according to an IBISWorld report.

The report identified three industries -- automotive, entertainment and apparel -- that will be most severely hurt by tax increases.

"When disposable income declines, nonessential items, such as entertainment, travel and fashion apparel, are the first to be cut from a household's budget," the report says. Those industries "are highly sensitive to changes in per capita disposable income, meaning that a small decrease in income results in a disproportionately large drop in industry revenue."

1. Automotive

IBISWorld names the car industry, including manufacturers Ford (F), General Motors (GM) and Toyota (TM), but also dealerships, gas stations and car-service providers such as car washes, as "one of the U.S. economy's worst-hit victims" if no deal is agreed upon.

"Cars are highly discretionary and expensive purchases that require significant maintenance, so a reduction in disposable income would force consumers to delay new purchases over the next couple of years," the report says.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs