Consumers Torn Over Christmas Shopping

Caught between fears of recession and the inducements of eager retailers, shoppers hitting the stores on the last weekend before Christmas were divided over how deeply to dip into their wallets.

"I didn't do too much Christmas shopping this year," said Enid, a retiree picking over the sales racks at a Chicago department store, who said the past year's stock market losses had blown a hole in her budget.

The all-important Christmas shopping season shaped up as less-than-cheerful for U.S. retailers against a backdrop of the Sept. 11 attacks, the war in Afghanistan and the drumbeat of company layoff announcements.

Research from brokerage house Merrill Lynch predicted U.S. holiday sales would rise an anemic 0.2 percent over last year, the slowest gain in 33 years. Such sales account for 23 percent of retailers' revenues, outside of necessities like food.

Scores of hard-hit industries already battered by the recession that began in March were reeling from the abrupt slowdown sparked by the Sept. 11 attacks. The gloom spread across industries from manufacturing to airlines and triggered deep layoffs at some companies.

Many shoppers in New York City, scene of the worst destruction in the September hijacked plane attacks, were somber.

"With everything going on in this city and around the world it's difficult to go shopping because it's always on my mind," said one.

Overseas, the mood was lighter as glittering shopping districts resounded with the swish of credit cards and the rattle of cash registers, suggesting fears of global recession might be exaggerated.

"When I see all these people buying, I say to myself, 'It's Christmas, let's shop now and worry later,'" said Jocelyne Guerin, an accountant browsing in the vast perfume department at Paris' Galleries Lafayette.

The imminent arrival of the Euro stoked shoppers' passions in Western Europe, giving many an excuse to spend saved-up francs and other currencies instead of cashing them in.

British shoppers were expected to make retailers happy this Christmas. Abbey National bank said Britons would spend an average of $870, a record and up 2 percent from a year ago.

"The shopping mood is good despite the events of Sept. 11," said Frank Albrecht, owner of a plush perfume shop in Frankfurt and head of a German retail association.

Albrecht did voice one caveat. "There is a dark side – there's been a big fall in tourism."

Eva Lindstrom, the manager of Sweden's only Gucci store, said: "People who spend their money here have chosen not to travel this Christmas, because they think it's not safe, and can therefore spend that money on Christmas presents instead."

But U.S. retailers were betrayed even by the weather as unseasonable warmth hurt sales of heavy apparel.

Some Money to Spend

Softening the blow to U.S. shoppers' pocketbooks has been the recent drop in gasoline and heating fuel prices, the lowest interest rates in a generation, and unspent travel budgets.

Some shoppers said they were responding to President Bush's appeal not to give in to terrorism and to go about the business of America – which some say is shopping.

"You've got to help the economy for starters by coming out with the Christmas spirit," Chicago city worker Matt Stroh as he grappled with bulging shopping bags.

"I'm not going to cut back now. I'm not in a position where I'm going to get laid off. I've done my mourning and my grieving about that (the attacks), and I still have the hatred and the feelings about it. But you've got to get on," he said.

The bustle at Carson, Pirie Scott's flagship store on Chicago's State Street, was heightened by a sea of "for sale" signs, grinning clerks handing out coupons and an in-store reggae performer singing upbeat songs.

According to sales clerk Bobbie Madden, shoppers were skeptical at first but have loosened up to the point where bargains have led many to do personal shopping as well.

"Heavy (store) discounting early and often made what looked like a disastrous Christmas not so bad," said Bank One Corp. economist Diane Swonk.

"This recession has been felt on Wall Street, felt in manufacturing and on the producer side, but the blood has not flowed on Main Street," Swonk said.

So far, the recession has not produced the steep downturn in consumer spending as have recessions past, she added, citing the cushioning affect of the tight labor market during the decade-long economic boom.

Total U.S. retail sales stood at $3.2 million at end-November, and were sure to surpass last year's $3.4 trillion, the National Retail Federation said.

Perhaps nowhere has the fall in tourism been felt stronger than in Israel and nearby territories rocked by violence.

"A very bad season. There are no tourists in the Holy Land," souvenir seller Victor Saca said in Bethlehem.