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September 22, 2009

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US holiday spending to be stagnant, report says

UNITED States holiday spending is expected to be flat versus a year ago, as consumers remain cautious and the national unemployment rate hovers at nearly 10 percent, Deloitte said in a forecast released late on Sunday.

Deloitte's retail group expects total holiday sales to be US$810 billion, excluding motor vehicles and gasoline, for the November-January period.

A flat result would be an improvement from a year ago when holiday sales fell 2.4 percent, but is hardly the encouraging sign some retailers and investors would be hoping for.

"Although there are signs that suggest the economy is nearing the end of its darkest days, many consumers remain burdened by restricted credit availability, high unemployment and foreclosures," said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP.

"Americans continue to save at historically high rates while also paying down debt, and these factors combined suggest another chilly holiday season for retailers," Steidtmann said.

He added that stable gas prices, strengthening home values and stock market gains would help support consumer spending during the all-important winter holiday season that starts on the Friday after the US Thanksgiving holiday.

While some data is pointing to an early economic recovery, many experts agree that consumers are not yet out of the woods.

US unemployment hit 9.7 percent in August and is expected to top 10 percent in what many economists are predicting will be a jobless recovery.

Federal Reserve Chairman Ben Bernanke said last week that the US recession "is very likely over," his most optimistic remark yet on the economic recovery.

US retail sales were up a better-than-expected 2.7 percent in August, their fastest pace in three and a half years, helped by the US government's "cash for clunkers" program.


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