Rick Newman

Many Barack Obama supporters felt a messiah had arrived when he assumed the presidency in 2009. But when it comes to predicting the future, Obama has proved he's a mere mortal.

A year ago, the unemployment rate was 7.7 percent, and mainstream forecasts predicted it might hit 9 percent or so before leveling off. The financial system, meanwhile, was a shambles, with banks barely lending. Stocks were still plummeting, huge companies like General Motors and Chrysler were on the brink of insolvency, and investors were worried that a full-blown depression might unfold.

[See 21 things we're learning to live without.]

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Hey, you. Yes, you—the one shoving your wallet back into your pocket. Are you aware that you've been making retailers very uncomfortable?

A façade of calm may be returning to the consumer landscape as a thrashing recession finally subsides. But behind the cheerful window displays are deeply worried retail executives who fear that shopping may never be the same again. Procter & Gamble, for instance, has begun a limited rollout of Tide Basic, a discounted version of its marquee laundry detergent. The move violates a core principle of traditional marketing: Never undercut your own products. But P&G fears it may lose customers altogether if it doesn't offer cheaper alternatives. That reflects a compression of the entire retail taxonomy, as upscale merchants like Saks and Nordstrom slash prices and offer cheaper goods, mainstream stores like Macy's and JCPenney lose customers to discounters, and millions of consumers seek used goods instead of new ones—or simply go without. The one unambiguous bright spot: dollar stores.

[See 21 things we're learning to live without.]

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What a buzz kill. After a booming start in 2010, stocks have reversed course, thanks largely to President Obama’s draconian new plans for taxing and regulating banks.

We should be thrilled.

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Scott Cohen spent 28 profitable years in the mortgage business, eventually starting his own firm just as the Southern California housing bubble was beginning to inflate in 2001. By 2007, the small company employed 15 people and provided enough income for Cohen, his wife, Merced, and their two kids to enjoy an affluent life in a tony Los Angeles suburb. But when the housing bubble burst, Cohen sold his business at a fire-sale price and watched in panic as the only industry he had ever worked in collapsed. His wife worked at the firm, too, and her job disappeared. As the family income plummeted, the Cohens traded in their two cars for cheaper ones, cut all the expenses they could, and ran up their credit cards. Finally, they had no choice but to sell their home for a loss. For the first time in 19 years, the former real estate executive became a renter. 

Many of Cohen's former colleagues took jobs at banks or retail outlets, went into teaching, or just dropped out of sight. Cohen spent a few months researching new fields and decided to start a financial-services firm focusing on seniors needing help paying for assisted living. For 18 months, he built contacts at hospitals and nursing homes, took courses, studied state regulations, and prospected for clients. Income was scarce. Clients often got cold feet after weeks of meetings. During one low moment, the 50-year-old businessman started looking for a conventional sales job—hitting nothing but dead ends. Finally, his new firm, Senior Advisory Services, began to build a roster of clients and produce enough income to stabilize the family's finances. "For a while, my optimism was challenged," Cohen says. "But I think it was good for us. It shook us up and helped us go in a different direction." 

[See 17 Ways Consumers Are Changing.]

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