erika miller has more abt the impact of a c.i.t.'sailure on small and dium sized businesses. >> reporter: the diffence of just o letter makes all the difference. citi is too big fail. c.i.t. is not. the vernment has decided that c.i.t.s not important enough to the financial system to se and the coany is expected to file for bankruptcy as soon tomorrow. that cld mean big trouble for hundreds othousands of small to medium sized firms that depend on c.t. for loans. c.t. is the nation's largest supplier of ctoring, a lifeline of the retailndustry. c.i.t. goes under, the national retail federati's mallory dunc says shoppers wi feel the impact. >> if suppliers cannot prode mercndise, then that means thathe retail shelves are sentially empty. if you walk into a retail ste now, you'll see there very little merchandise. but we know that with the christmas season comg up, it's portant that that merchandis be there to help the economyet back otrack. >>eporter: but many small banks say don't worry,hey can pick up thslack if c.i.t. goes under. ch

as erika miller plains, the recession has chand the rules r back to school shopping. >> oh,his one! actually, thisne! this o!" >> repter: while most kids are focused on vacation, or mp, five-year-ololivia anton is ady to shop. >> and look mom, i gothese! reporter: she has come to o navy looki for cool clothes. her mother cistina wants them be practical and a good val as well. >> the are two for 28. >> reporter:ike many families, the antonslan to spend less this back to school seas than last. the average americ family expects to sll out about $550 r back to school needs. that's abo $50 less than last year but, christina bieves she's getting more bang for r buck. you got a lot of ims today, how much did y spend in total? >> $184. we really did well. mean, we did all of our back to school shopng and we have everything that weeed. >> repter: the back to school shopping season is being wched closely-- to seeust how tough it is to get csumers to spend. many retailers are hing low prices will encourage rents to buy more than st bare necessities. ma stores started promotions earlier th usua

and as erika miller explains, that's causing a seismic shift in the economy: >> reporter: before the recession, shoppers didn't hesitate to satisfy cravings. nowadays, it's all about savings. >> you can't spend it if you don't have it. i'm not spending as much. >> i'm thinking twice before i purchase items i don't actually need. >> reporter: economists call it the biggest change in consumer spending since world war ii. consumers call it living within their means. >> now we're careful. we're on a tighter budget. food budget. house budget. we're on a much tighter budget. >> i look very closely to what i can spend and you know, there's a limit and that's it. >> reporter: the national savings rate now stands at almost 7%, the highest in more than 15 years. the rate was negative before the financial crisis. economist david wyss says the party is over. >> i think we're at the beginning of a significant change. we've been going through a period of about 20 years now of declining savings rates. now i think we're going to go into a similar period of rising savings rates. as we get back to mor

erika miller looks at the new debate about stimulus. >> reporter: many economists are clamoring for more government stimulus to help the recovery gain traction. not bob brusca. >> i think this is jumping the gun. i think it's not only jumping the gun, but it's probably something that's unnecessary. and if we think back to those thrilling days when they put that big stimulus program together, let's remember how much they haggled. let's remember all the junk that got in it. and let's ask ourselves, why do we think it would be any different this time? >> reporter: he points out that so far, only 10% of the $787 billion stimulus package passed in february has hit the economy. what's more... brusca thinks the economy is not nearly as weak as most people believe. >> i really think we're close to the end of recession. i think we are going to cap the rise in the unemployment by the end of the year. i think we're going to have job growth occurring before the end of the year. >> reporter: but other economists-- like john albertine-- have a vastly different view of the economy. >> i think we are in

as erika miller explains, experts say goldman has important advantages over its rivals. >> reporter: call it the goldman mystique, an aura created through secrecy and success. you won't find the company's name on its buildings, let alone a sports stadium, like citi legendary, and its second quarter earnings were no exception. the bank managed to blow away expectations in the midst of the worst financial crisis since the great depression. k.b.w.'s fred cannon says he knows how. >> the short answer is, they're goldman. the longer answer, though, is you have to remember what happened in the quarter, and that is we went from a period of a completely frozen financial market in the first quarter to one where liquidity came back through the government programs. so trading activity really did improve a lot in the second quarter. >> reporter: but there's growing concern about goldman's dependence on trading revenues. >> we don't consider it's first- half results to be sustainable. >> reporter: morningstar's michael wong sees other challenges, as well. >> the equity underwriting fees, pent-up

erika miller, "nightly business report," new york >> paul: tomorrow, our friday market monitor guest is frank cochrane, president of investment timing consultants. >> suzanne: federal agents have broken up a huge money laundering and crime ring, arresting dozens of new jersey politicians and religious leaders. among the accused: the mayors of hoboken, secaucus, and ridgefield. the feds say the bust ends a ten year probe of bribery and influence peddling. that had become ingrained in the state's political culture. >> paul: a management shakeup at general motors. leaving the firm are its g.m. north american president and global manufacturing head. a new board is also in the works with some directors named by g.m.'s largest shareholders. the u.s. and canadian governments. the moves are part of a larger plan to make g.m. profitable again, as a smaller, more efficient automaker. >> suzanne: an independent federal reserve versus a central bank that is more transparent. tonight's "two ways to play" has two takes on the issue. here's kevin depew of "minyanville" and "minyanville's" kevin dep

erika miller "nightly business report" new york. >> paul: tomorrow, street critique guest david garrity joins us for an update on tech earnings. >> suzanne: there's a new leader at freddie mac, the mortgage giant's third c.e.o. this year. former putnam investments chairman charles "ed" haldeman has been named chief executive officer. his predecessor, john koskinen will return as freddie's non- executive chairman of the board. haldeman is expected to begin his new job next month, after the company releases second quarter results. >> paul: it looks like cost cutting moves are perking up results at starbucks. late today, the coffee giant said it earned $151-million or 24-cents a share in its third quarter. that beat expectations by a nickel and reversed a loss from a year-ago. starbucks shares ended the day at $14.69 a share, but jumped 9% in after hours trading. euquu >> suzanne: here's a look at what's happening tomorrow. >> suzanne: tonight's "of mutual interest" commentary has a list of hot funds to avoid! here's john waggoner, mutual fund columnist at "usa today." >> you can find plen

erika miller, nightlbusiness report, new rk >> sie: as we mentioned oil prices fell day on worries of a longerhan expected recession. in new york trading,ugust crude futures dropped $28 or 4% to $64.05 a barrel. some traders say investo who bought into the market on expectations of an ecomic recovery a cashing out. others s the oil market was simply orvalued. >> jf: the weakness in oil fed into the samworries in the stock market. the dow open on the weak side, losing 74 points in the rly part of the session. the financials led the way lor; bank of america and tigroup shares finished down more than 3%. instors rotated into defensive issues like mercand procter and gamble; that helped e dow rally back from the lo, while the nasdaq continuedo struggle and stocksnded the day mixed. the dow rose 44.13 to 83.87. thnasdaq fell 9.12 to 1787.40. and the s&p 500 addetwo points close at 898.72. in the bond mark, the 10 year note fell 2/nds to 96-26/32nds putting the yield at 3.51% peent. >> psico is boosting its investment in russia, planng to spend a bilon dollars over e next three years despit

. >> reporr: erika miller, ightly business report", new york. >> paul: now, let's ta a look at some ocks in the news night. u]uóÑ] and the are the stocks in the news tonight, susie. >> susie: paulif you're an investor in cerberus cital's main hedge fund, don't countn cashing out anime soon. ceerus says that because of the weak mkets it can't give clients their money back. but the firm says its reworking me of its terms and hopeinvestors will be able to leave gradually. the key problem: itsll-fated investnts in automaker chrysler and lender gmac. the firm says in the fute, it'll avoid ose kinds of hene-grabbing deals. >> paul: tomorrow, our fday market monit guest is robert drach, editor of the "drac weekly research port."  >> susie: ponzi schemer rnie mado is not going to appeal his 150-year sentence. maff's lawyer did not give a reason for his cliens decision. madoff w sentenced last week for masterminding one of t biggest financiafrauds in u.s. hiory. he still doesn't knowhere he'll servhis time. the u. bureau of prisons will make that decision. >> pau for millions

erika miller, ightly business report", new york. jeff: while earnings did little to move stos today, an improvement in rail sales numbers helped wall stet into the blac consumer-relatedtocks, like home depot, prtor and gamble, and disney, roseicely after the commerce deparent said reta sales rose a better than expected six-tenths of one percent in june. and th had stocks trading modestly higher rough the afternn. the dow went on to closeith a gain of almo 28 points at 8,9.49. the nasdaqose 6.52 points to 1,799.73. the s&p 500 rose 4 3 points to 905.84. in the bonmarket, the ten-year note fell 302 to 97 4/32, putting the yielat 3.47%. >> jf: the banking sector gets most of the inwhen it comes to the nation financial crisis. less well-known the status of the nation'shousands of credit unio. compared to banks, these non profitinancial institutions have largely weaered the storm. >> reporter: cret unions look likeanks and act like banks. but did they lend likeanks during the rl-estate boom? the answers yes and no. for ample, brightstar,

as erika miller explns, investors wa to know how the earnings are being generatednd evidence busins is improving. >> repter: a rocketing covery for earnings may be t much to hope for but analt nick colas thinks corporate profits may be athe start of a gdual climb in altude. >> i think ihas to be a slow d steady recovery because we're in such a deepole in the econom unemployment is stilrising. inial claims are still very high. unemployment rates a still very high and are probably gng to climb past %. and all of those factors me for a ower than average recovery. >> reporter: he is skeptal about the earngs forecasts of ll street analysts. cording to thomson reuters, earnings for the s 500 are excted to fall 21% in the third quarter. but thanks to easy cparisons, profits are expected to soarn eypopping 188% in the fourth. colas says no way. >> i tnk its very unlikely. and i think wh you are going to have toook at what kind of sustaible core earnings growth these companies can ha. d i would be surprised if co earnings coulde anything betterhan 5% or 10% improved. and co revenues anything be