I keep looking for some positive economic developments and simply can't find any. Most of the financial news, outside of individual stocks, is very weak. And this is causing concern among the big-cap stocks. Unfortunately, I don't see the economic picture getting better any time soon.

Since its peak in March of this year at about 10,800, the Dow Jones Industrial Average has declined about 6%. While bellwether stocks like IBM, DELL, Intel, and others are coming out with solid earnings, the market is yawning.

Why? Because the market is more concerned with the bigger economic picture. Here's what we saw last week, with the hope you do not find my comments too snarky:

-- U.S. mortgage applications fell last week for the second time in three weeks, down 6.3%. Are consumers spooked about the Fed increasing rates or are they just getting tapped out?

-- U.S. jobless claims rose more than expected last week. The U.S. Labor Department said initial claims for the week ending July 10th rose to 349,000 -- up 40,000 from the week before. Hmm... more people looking for work. Not a good sign.

-- U.S. retail sales dropped 1.1% in June -- the biggest drop since February 2003. Again, analysts were taken by surprise. But my continued question: How much more debt can consumers handle with interest rates rising?

-- Sales of U.S. autos and other motor vehicles were down 4.7% in June. It's no wonder the "big three" U.S. automakers see almost 50% of their profits these days coming from financing activities. Despite all the incentives out there, car lots are full.

-- U.S. wholesale prices fell 0.3% in June, the biggest decline in a year, and another surprise to analysts. This statistic keeps with my theory that deflation is not dead. With this news, any thought of a fifty basis point hike in one move by the Fed becomes exactly that, a thought. The Fed will continue with its "measured" action.

The general consensus by economists and analysts on the implications of higher interest rates is that the higher rates will not have a big impact on consumers. I beg to differ as I believe just the thought of higher interest rates has dampened consumer demand for high-ticket items already.

Most analysts are predicting a Federal Funds Rate of 3.75% to 4% by the end of December 2005. Given the U.S.'s current economic environment, I continue to be unconvinced the Fed rate will rise so drastically from last month's 46-year low of 1%... because should such increases actually become reality, consumer spending will be halted. And we cannot afford to have consumers stop spending.