Further, many states have solved their budget woes by raising taxes and fees. Falling real wages, high unemployment and higher taxes create more tight fisted customers for Walmart ( WMT) and Kia but fewer enthusiasts for Nordstrom and your local Ford ( F) dealer.

Big caution in the auto-patch -- GM ( GM) is discounting to clear piled up inventories, and the dollar value of retail auto sales is not matching the surge in vehicles sold.

Overall, the economy remains vulnerable to another shock -- be it the fiscal cliff, big tax increases and spending cuts to avoid it, or some other disaster. The focus on higher taxes in the "fiscal cliff" negotiations almost guarantees another year of tepid growth or worse.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Professor Peter Morici, of the Robert H. Smith School of Business at the University of Maryland, is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.

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