Shifting Gears

Who's gonna tell you when
It's too late
Who's gonna tell you things
Aren't so great
--Ric Ocasek

Reports streaming from discount retailers like Wal-Mart (WMT) and Target (TGT) continue to suggest that consumers are allocating much more of their purchases on staples while shunning discretionaries.

If this trend increases, then the effect of this 'hunker down' behavior on the U.S. (and world) economy will likely be significant. Add this ingredient to a mixture that includes burgeoning debt, rising prices of staples, and tight credit and you get a nasty deflationary, not inflationary, cocktail.

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