Halloween to be frightening for retailers

Back-to-school sales were weak for U.S. retailers, according to most statistics, and many are now predicting lackluster holiday sales in November and December. The only significant retail event between the two periods is Halloween, and it is looking scary for store owners.

According to the National Retail Federation, "consumers are expected to spend an average of $56.31 on Halloween, down from $66.54." The study of retailers also says, "Nearly one in three (29.6 percent) consumers say the state of the U.S. economy will impact their Halloween spending plans. Of those who will be affected, the largest majority (88.0 percent) plan to spend less overall." Sales for the eve of All Saint's' Day are expected to total $4.75 billion.

This news foreshadows a rough fourth quarter, a period when many retailers make 40 percent of their annual sales. The 2008 holiday season nearly ruined some retailers and helped put operations like Circuit City out of business. Store closings and lay-offs in the industry hit unprecedented levels in early 2009. There has been some hope, albeit false, that this year would not be as bad.

If the 2009 holiday period is even worse than experts forecast, it will raise questions about whether the economic recovery can be sustained. Consumer spending is still 70 percent of U.S. GDP, and even if manufacturing and export numbers improve, that decline cannot be offset. A hibernating shopping public, driven underground by unemployment and poor access to credit, could push GDP growth back into the red.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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