Shoppers snap their wallets shut after back-to-school purchases

Now that the back-to-school shopping is done and Labor Day sales are history, shoppers have gone back to pinching pennies. Retail sales last week had the biggest weekly drop since the last of the holiday gifts were returned in January.

The International Council of Shopping Centers' weekly sales tally was down two percent for the week ended September 19, compared to the week before. That's the biggest week-on-week decline since sales dropped 2.3 percent for the week ended January 10.

Year over year, sales were up 0.6 percent, but retail experts keep warning that we should take those comparisons with a grain of salt. September 2008 marked the moment that the financial chickens came home to roost with the Lehman Bros. bankruptcy and the stock market collapse; shoppers pulled their wallets shut and haven't really loosened up since.

"The year-over-year pace of sales is being lifted by some easier comparisons with September 2008 performance, which marked the start of an extended period of more intense downward pressure on sales from the strengthened recessionary grip on consumer spending," said Michael P. Niemira, the ICSC's chief economist, who also blamed the nice weather throughout most of the country for keeping shoppers out of the malls. He is still holding on to his forecast that September sales will be two percent below last year's.

The shoppers' death grip on their wallets continues, now that the back-to-school bump is over. We've seen some encouraging signs for the holiday shopping season, but that only means sales won't be down as much as some earlier projections. A recent forecast from Deloitte Services LP is calling for this year's holiday sales to be flat over last year.

While the retailers are seeing encouraging signs that the recession has bottomed out, consumer confidence is still very shaky. Shoppers are not taking their spending tips from Wall Street, but from the news of rising unemployment, sagging housing prices and tight credit.

After the carnage of last holiday season, retailers have pulled back inventory to avoid the fire sales of last fall. For the most part, they managed rather successfully through the back-to-school season, if August sales are to be believed.

So this may not be the year to wait until the last minute to shop for holiday presents. The selection will be limited and the sales could be few.

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