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Cramer: Congress Holds the Fate of Holiday Retail Sales

Monday, 29 Nov 2010 | 6:31 PM ET
Retail Reality
Cramer tells you what's next for this holiday season.

Continued strength in retail this holiday shopping season is dependent upon what action Washington takes in the coming weeks, Cramer said Monday.

Retail is reliant on spending, he explained, but consumers will only spend if they have jobs and are confident in their economic outlooks. Therefore, in lieu of job creation, Congress should be looking for ways to boost that spending.

The problem is, Congress can't seem to agree on unemployment benefits, which are set to expire for millions of struggling Americans who stretch their dollars at places like Dollar Tree , Family Dollar , AutoZone and CarMax . These "low-end trade down plays," as Cramer called them, involve shopping for everything from discount apparel and food to auto parts that keep older cars running.

At the same time, Congress and President Obama are at odds on the tax bill. This affects more greatly the wealthy high-end shoppers, who visit the likes of Tiffany , Ralph Lauren , Coach and Nordstrom . The rich have been shopping, which of course has been good for these select retailers. But without some clarity on that bill, it's very likely that they will close their wallets until the White House and Capitol Hill find a compromise.

Yet as dysfunctional as it is, Cramer doesn't think Congress will play the Grinch and steal what could be a strong holiday shopping season. He thinks lawmakers will act on unemployment benefits as soon as this week and will ultimately leave the tax cuts in place.

"Washington holds the fate of the consumer in its hands," Cramer said. "For once, I actually expect the politicians to get it right."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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