Kim Letke bought her first Christmas gift of the season recently when she found the Moon Sand castle play set for her kids.
But the Timonium woman believes it's probably going to be a tough season for her family because the work her husband does in the home improvement business has slowed along with housing sales.
"We might be spending a little less this year," said Letke, as the stay-at-home mom watched her kids run around the play area at Towson Town Center recently.
Retailers are hearing similar consumer concerns, and many merchants are braced for sluggish sales as they prepare for the holidays. The shopping season typically begins modestly just after Halloween as retailers gear up for the official post-Thanksgiving start. But crews are already decorating some stores, and holiday catalogs from Montgomery Ward, Neiman Marcus, L.L. Bean and others are in the mail.
The National Retail Federation predicts that sales this holiday season will post the weakest growth in five years. And some of the nation's top retailers are lowering sales forecasts for the year or planning to hire fewer workers in November and December.
For shoppers, that probably means steep discounts and extended store sales. Wal-Mart Stores Inc. already announced several price cuts on toys and other merchandise; that decision from the world's largest retailer is likely to force others to follow, analysts said. Other companies, including Nordstrom, have started marking down fall goods to make way for holiday merchandise.
While retailers acknowledge that predicting how consumers will spend during the holiday season is never a precise science, the economy is clearly wearing on customers. Most retailers point to the weakened housing market, high energy prices and a credit crunch among the nation's banks as key signs that consumers will be more frugal this year.
Customers have already provided a glimpse of their concerns, leading several retailers to report less-than-stellar results on back-to-school and early fall sales. Although the stock market showed signs of rebounding when the Federal Reserve cut two key lending rates last month, concerns about subprime mortgages and other bad economic news through August may be fixed in consumers' minds as they shop for the holidays, experts say.
"All the conversation around the economy being in trouble is causing consumers to sit on their wallets," said Craig Rowley, vice president of the Hay Group, a national retail consulting practice in Dallas.
