According to CNNMoney.com, the upcoming fourth quarter is the make-or-break period for the retail industry and the path leading to the crucial holiday season is peppered with land mines. As much as 50 % of merchants’ annual profits and sales are accounted for in two months: November and December. So far consumers continue to spend confidently, unmoved by the growing crises in the housing and credit markets.
Retail economists credit a still resilient jobs market and growth in real income for making Americans feel confident about their spending ability. But that confidence is waning according to one key barometer. The Conference Board on Tuesday reported a steep drop in consumer confidence in August, the biggest in nearly two years and possibly the first clear sign that consumer spending – which accounts for two-thirds of the nation’s economy – is on the brink of a contraction.
And that possible contraction in consumer spending along with housing, credit market turbulence, product recalls and declining store traffic threaten 2007’s holiday season.