• Retailers. Many retailers, such as Kohl's Corp. (NYSE: KSS) , cut earnings projections after reporting weaker-than expected sales Thursday.
• Credit cards. Capital One Financial Corp. (NYSE: COF) said its 2007 earnings would fall short of its earlier forecast.
• Telecommunications. AT&T Inc. (NYSE: T) said it has been cutting off more landline and high-speed Internet customers for non-payment thanks to rising foreclosures.
• Autos. December auto sales also fell with a 3% drop in sales compared to a year ago
• Fast food. Restaurants are also taking a hit. For example, shares of McDonald's Corp. (NYSE: MCD) fell 6.6% after an independent analyst's survey pointed to weak U.S. store sales in December.

Real consumer prices rising. Though the Federal reserve doesn't use consumers' real costs as a basis for setting policy -- it measures inflation excluding food and energy -- that doesn't eliminate consumers need for food and fuel. With commodity prices -- such as wheat and corn -- in record territory and gasoline way up, consumers are pinched. For example, according to AAA, regular unleaded gasoline is averaging $3.10 a gallon in the U.S., up from $2.99 a month ago and $2.28 a year ago.

Consumers forced into higher rate borrowing. To pay for these rising costs, consumers are being forced into the more extreme ends of the consumer financing spectrum. How so?

• Consumer borrowing at historic highs. Consumers have reached the limit of what they can borrow through traditional means. According to the Federal Reserve, credit market instruments -- mostly home mortgages, auto loans and credit-card receivables -- have hit the equivalent of 18.7% of household and nonprofit organization assets, an all-time high.
• Cashing in gold. At $900 dollars an ounce, record-high prices for gold have prompted many people to trade in their jewelry for cash. As the Journal reported, Michael Goldstein, a New York diamond dealer said, "I just walked past one of the gold refiners, and there must have been 20 people waiting to see this guy. They're looking to cash in."
• Pawnshop loans increasing five to ten-fold. As the Journal reported Dave Crume, CEO of Topeka, KS-based Capitol City Pawn & Jewelry, which runs pawnshops in Kansas and Nebraska, said, "Our typical loan used to be $60 to $100. We do see more people coming in that do need to borrow $400, $500, $1,000. Those are people that need the money for house and car payments and things like that."

At 12,606, the Dow has fallen 11% from its October high of 14,093. Should you sell all your stocks and put the money in a money market fund? If you need that cash in the next year or two, you might compare the after-tax sales proceeds to how much you think the value of your stocks will drop. If the proceeds exceed the lost value, then sell.

Otherwise, I hope you have a strong stomach. With 70% of the U.S. economy going into reverse, the pain will spread across the stock market.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.