Consumers feeling fear of fiscal cliff

The macro concerns are finally reaching everyday Americans.

By Jim Cramer Dec 13, 2012 10:28AM

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MedioImages CorbisWas Wednesday the day when it dawned on people that without a deal, consumers could be in real trouble? Was it 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) Tuesday about gross margins, tell me that everyday Americans are now starting to figure out they have to be worried, even if they are not sure exactly what to be worried about. They know we have a big budget deficit. They know, as they did when the debt-ceiling crisis occurred, that something bad is going to happen, and they know it might be something bad happening to them.

 

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, I was quite contented with what Ben Bernanke is doing (read on TheStreet). 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 rebounds are, 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 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.

 

Cramer's face 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.

 

 

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204Comments
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This puts things into a much better perspective.

Lesson # 1:

* U.S. Tax revenue:       $  2,170,000,000,000
* Fed budget:                 $  3,820,000,000,000
* New debt:                    $  1,650,000,000,000
* National debt:              $14,271,000,000,000
* Recent budget cuts:   $        38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

* Annual family income:                                        $  21,700
* Money the family spent:                                     $  38,200
* New debt on the credit card:                             $  16,500
* Outstanding balance on the credit card:          $142,710
* Total budget cuts so far:                                    $     38.50

Got It ?????

 

OK now,

Lesson # 2:

Here's another way to look at the Debt Ceiling:

Let's say, You come home from work and find

there has been a sewer backup in your neighborhood....

and your home has sewage all the way up to your ceilings.

What do you think you should do ......

Raise the ceilings, or remove the shlt?

Dec 13, 2012 11:55AM
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I think every American person is tired of the Rebublicans and Democrats fighting over this fisical cliff!! These people we voted in are a embarrassment to our country as a whole. they should go down in history as our worst representation our country has ever had. Period!!! Five guys off the street could have settled the fisical cliff in two days!!!
Dec 13, 2012 11:50AM
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Life is great!

 

Chris Van Hollen & Elizabeth Warren in 2016 & 2020!

 

God bless Mom & Pop stores!

 

God bless unions and living wages!

 

DIE big and unregulated corporations and DIE Ayn Rand Capitalism, DIE!

 

God bless America!

Dec 13, 2012 11:48AM
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People may say they understand and fear the fiscal cliff, but I doubt that most do.  What people fear is what they see - namely unemployment, underemployment and inflation in the prices of food and energy and basic essentials.  If they have a job, their pay isn't increasing nearly as fast as the cost of gas, heating oil, milk, peanut butter, etc...  They are fearful because it now costs more than $400 to buy an average set of new tires for an average passenger car.  They are fearful because it now costs more than $100 to replace a car battery.  They are fearful because propane is now $3/gallon or because many of them have to work a half a day just to fill up the gas tank in their car.  People are fearful because many of their hours at work are being cut because of Obamacare.  They are fearful because they still owe more than their houses are worth.  They are fearful because with rock bottom interest rates, there's no point in putting a little money aside in the bank for a rainy day.  They are fearful for their children's future because tuition costs are going up by 10% a year in many places.  And they are fearful because all they ever hear out of Washington anymore is blame, class warfare rhetoric and  fear mongering.

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When does unemployment end for these people? Is it forever? Nothing makes someone go get a job (Even if it's not one they WANT) better than no more help. If you keep getting a check, where's your motivation?
Dec 13, 2012 11:35AM
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i truly doubt the average guy is investing in volumes enough to be "seen" by anyone at the macro chart level of the stock market. 

 

the 401K mutual funds might include a significant amount of average joe money, but it's in the hands of the masterful fund managers - so THEY already know all this, right? 

Dec 13, 2012 11:29AM
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To hear these right wingers talk you`ld think people on mimimum wage should

be taxed to death.I have nieces and nephews in their teens who make that

wage and they pay taxes.Don`t believe that 47% that some Nazi far right

idiot dreamed up.

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I still haven't bought the first Christmas present yet. Need to worry about food and gas first. The middle class always suffers the most, it will continue into 2013.
Dec 13, 2012 11:09AM
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BoBo you do know that when we go over the cliff a whole bunch of people on extended unemployment will be shut out and not counted. This will result in a false reading of improved unemployment. That was one of Bennie's triggers to stopping all the QE flow.

 

Think man.... don't just spew crap.

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