The consumer is finally spent out

The Larry Kudlow optimists accused their pessimistic critics of “crying wolf” about American consumers. American consumers always find the ability to resurrect themselves. It is true that the consumer has come to the rescue of every recession in recent memory, no matter how dire their balance sheet looked. But even the Wall Street Journal’s “Credit-Card Pinch Leads Consumers To Rein In Spending” says that this time is finally different. The WSJ confirms that consumers are losing the capacity for additional borrowing, and what little capacity remains is being used for everyday expenses such as food, gas and electric.

The Journal gives a few “heart breaking” stories about one less Starbucks (SBUX) drink and fewer electronic gadgets. But AutoNation’s (AN) disappointment and Toyota’s (TM) 8 year car loans tell the real story. Macy’s (M) has also confirmed the aspirational buyer is dead, with a 7+% drop in same store sales. It clearly does not matter what the Federal Reserve does if consumers cannot take on any more debt. Only time can help.

At the same time the Journal is predicting doom, The New York Times’ “Creators of Credit Crisis Revel in Las Vegas” describes the partying at the American Securitization Forum.

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