The retail sales decline was actually a just a knock-on effect of the expiration of cash for clunkers. Retail sales excluding autos were up 0.5% on the month. But the basic message of the headlines—that the consumer economy is still struggling while Wall Street (or at least parts of it) thrive—is not too far off.
The split is apparent in JPMorgan Chase’s third quarter earnings release. The big profit centers were investment banking at $1.9 billion in net income and the corporate investment portfolio at $1.3 billion. Retail banking pretty much broke even, and credit cards lost $700 million. CEO Jamie Dimon said he didn’t expect those consumer segments to look much better next year—only after 2010 is he hoping for much improvement.
Will Americans be willing to wait until 2011? One really big wild card is the possible political response. If the consumer economy keeps struggling and JPMorgan and Goldman Sachs keep reporting big profits, the anti-Wall Street backlash is just going to grow, grow, grow. I was struck yesterday by this post by my Facebook friend Francine Hardaway, a Phoenix-area entrepreneur. It’s a plug for Michael Moore’s new Capitalism: A Love Story:
I am the first to agree that Michael Moore exaggerates. But in this movie, not so much. It is 100% true that Congress is owned by the financial institutions lock, stock and barrel. I don’t care which party you belong to — I’m an independent — you should be outraged by this movie if you are young, or have children, or work, or build businesses. Because America has been, and continues to be, ruined for the rest of us by about a hundred people on “Wall Street” who have all the money and therefore run the government and your life. It’s everything from credit card fees to subprime mortgages, to Ponzi schemes, to health insurance reform.
This is a businessperson writing. And tens of millions—maybe hundreds of millions—of other Americans must also feel like this. Surely some politician is going to find a way to channel this anger (yes, Glenn Beck is channeling some of it, but he aims it more at Washington than at Wall Street). And when that happens, Jamie Dimon and Lloyd Blankfein may want to duck.