The Consumer Feels the Fear of the Cliff
Posted at 6:30 p.m. EDT on Wednesday, Dec. 12
Was today the day when it dawned on people that without a deal, the consumer could be in real trouble? Was today the day when it hit the market that the regular guy is concerned?
I have to tell you that the comments from Wal-Mart (WMT)
, on top of the comments from Dollar General (DG)
yesterday about gross margins, tell me that the everyday person is now starting to figure out he has to be worried, even if he is not sure exactly what it is that he is supposed to be worried about. He knows we have a big budget deficit. He knows, like he knew when the debt-ceiling crisis occurred, that something bad is going to happen, and he knows that it might be something bad happening to him.
So that's who pulls back.
We may now be past the point of who is to blame and more to the place of "I don't care who is to blame, do something." That's why, contrary to many people on this site, I was quite contented with what Ben Bernanke is doing. He knows that sudden austerity is coming, and the last thing the country needs is a guy who is going to raise interest rates now because we had some good housing data. I think he recognizes how fragile the construction and auto rebound is, and he needs to send a signal that he is not a Jean-Claude Trichet figure who wants to start raising rates as soon as possible.
It drove me crazy today to hear so many people talk about how the real problem now is how Bernanke will get out of this position when things get better.
To me, what's pertinent is, who is going to hire if everybody gets a tax increase and if instant and stupid spending cuts cause 2 million jobs to be lost?
Bernanke knows that austerity is good incrementally but hideous all at once and without thought. That's why he coined it a "fiscal cliff," for heaven's sake. So don't blame him. He knows that consumer and business confidence is falling. He knows the cliff is coming.
He just wants to make the landing as gentle as possible, although when you jump from a cliff without a rope, the results tend to be less than optimal.
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