What Black Friday, Cyber Monday and the Fiscal Cliff have in Common

PHOTO: Consumer are more confident this holiday season despite looming fiscal cliff worries.

The shopping season is upon us. Black Friday. Cyber Monday. For the next month, intrepid American consumers will hit the stores like there's no tomorrow --- nudging hundreds of thousands of retailers into the black and ourselves into the red, only to spend the balance of the year clawing our way back to some semblance of solvency.

But this year, things are different. While visions of sugarplums may dance in our heads, we have butterflies fluttering in our stomachs. Why? Because the dreaded fiscal cliff --- which got short shrift from the candidates during the final months of The Campaign That Wouldn't Die --- has burst back into our collective consciousness with a vengeance, splashed across every front page, TV and computer screen in the land. With zero hour less than 45 days away, just one thing stands between us and a double-dip recession: the United States Congress.

Feeling lucky? Not me. Stanford upset Oregon this weekend, that's about it for my luck this year.

Nevertheless, many people are. Cliff or no cliff, consumers are more confident. Credit card use is up --- as are late payments. And while the numbers aren't huge, they are significant --- and testify to a more optimistic public. In the quarter from July to September, the average credit card debt per U.S. borrower increased by 4.9 percent over the same period one year ago; this corresponds to a rise in consumer confidence as hiring improved steadily over the same period --- with an additional 171,000 jobs added in October. Banks are putting more credit cards into customers' hands, and the percentage of late payments has been inching upward --- two more signs that our post-crash caution is beginning to slightly wane. Is that a good thing? That depends: cliff or no cliff?

It's a question plenty of people prefer to avoid. The better to avoid it, they are doing what people do so easily and so willingly --- and what Congress, shamefully, has turned into a signature move: kick the IED down the road for another day. This "Please say it ain't so, Joe" approach is especially attractive in this context, since no one is really sure just what will happen if Congress does send us tumbling into the fiscal abyss.

What we know for sure is that if it does happen, it's going to hurt. The fiscal cliff has several components, starting with the scheduled sequestration of $1.2 trillion, to be cut equally from defense and non-defense spending over about a decade. That would surely hurt the economy and wound individual consumers by triggering both layoffs and cuts to key elements of the safety net. (Despite what you've heard, government does indeed create jobs --- and, as we may soon observe, congressional inaction can certainly destroy them.) All this could reduce GDP growth by .5 percent or more, according to the Congressional Budget Office; it would slam Texas, Virginia and California especially hard, but many others would be affected as well.

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