Shoppers plan cautiously this holiday season

SAN FRANCISCO, Nov. 19, 2007 (KGO) (KGO) -- Despite the hoopla of an early start to the season, the holiday cheer's missing at retail stores. Why shoppers say they're just not in the mood to spend as much this year. What will be the economic consequences?

Employees are gearing up for "Black Friday," -- the big shopping day the day after Thanksgiving. But many shoppers say they won't be swayed by the big Christmas decorations to spend big.

They've already made up their minds as to how much they want to spend this year.

"Usually I buy like one person two or three things. Now I'm saying I'm just going to buy them one thing and I usually buy my family members something and their kids. Now I'm just going to do the kids," said Kandi Gaston.

A survey by the Consumer Federation of America found that 35 percent of shoppers plan to spend much less than last year.

Those most likely to cut spending are from lower to middle income households with incomes between $25-50,000 dollars a year. About 42 percent of this group said they plan to scale back.

Economists say blame it on the widespread sub-prime mortgage crises, the high cost of home heating and the high cost of gasoline.

"I think it's awful. But there's nothing you can do about it, you just have to cut your budget elsewhere," said San Francisco resident Shakeela Kahn.

Respondents routinely say they plan to reduce spending even when they don't. But economists say this year may be different, as many consumers have genuine concerns that a recession is looming.

"We're at a very risky point in the cycle," said Professor Bob Edelstein.

Bob Edelstein is a professor at UC Berkeley's Haas School of Business. He says a slow holiday shopping season could have far-reaching consequences.

"The consumer doesn't do well that means they don't buy goods, but a lot of those goods are imported goods which will affect places outside the United States such as China. If China slows down, that will affect their ability to re-circulate dollars into the Treasury market which could change interest rates here," said Edelstein.

Retailers are doing everything they can to lure people to spend -- as many stores are already offering discounts.

People like Lori Smith, however, don't need a lot of arm-twisting.

"My thoughts are any time is a good time to go shopping," said Smith.

It's that kind of shopper that retailers are hoping will put them in the black this holiday season.

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