The business stories that matter, by Fortune's Colin Barr
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January 10, 2008, 10:12 am

Consumers’ wallets looking empty

What’s in the American consumer’s wallet? Not much, judging by poor numbers released Thursday by credit card lender Capital One (COF) and retailers led by Macy’s (M). Capital One shares dropped to a new low in morning trading after the company warned in a midnight press release that its 2007 earnings will fall 20 percent short of the bank’s previous forecast. The announcement prompted the company to counsel Wall Street that it “remains well-positioned with respect to funding as a result of its more robust access to deposits, reduced reliance on wholesale funding markets, and strategy of holding significant liquidity.” That is, Capital One doesn’t have to expect to raise money in the markets this year, which is a good thing considering investors’ aversion to lending money to all but the safest borrowers. Meanwhile, Macy’s said sales in established stores dropped almost 8 percent last month, prompting CEO Terry Lundgren to muse that “macroeconomic trends led customers to spend cautiously for the holiday.” And beyond: Macy’s expects to see January same-store sales drop about 5 percent from a year ago. The retrenchment is on.

Why isn’t anyone looking at what is really different from last year at this time? Gas prices!!! For months now the rich, middle class and the poor are paying a $1.00 more for gas. The oil company report profits and I can’t afford to fill up tank. The price of gas is killing us. We still have to ride to work. My tax refund will go right back to the company making the profits. What are we stimulating?

Posted By Jackie, Richmond, Va : February 8, 2008 1:29 pm
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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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