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Holiday Shopping Brings Economic Concerns into Focus

The Friday after Thanksgiving kicked off what most consider to be the beginning of the holiday shopping season, with retailers hoping for a robust consumer turnout. Financial analysts discuss how consumers' concerns over the housing slump and falling dollar may affect spending this holiday season.

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    Is the credit crunch translating into a consumer crunch? Will Americans shop amid the subprime mortgage crisis, rising oil prices, a volatile stock market, and signs galore of an economic slowdown?

    As the holiday shopping season begins, these are some of the questions worrying retailers, manufacturers, the Federal Reserve, and economy watchers like our two guests. Tonight, David Wyss, chief economist for Standard & Poor's, and Michael Mandel, chief economist of BusinessWeek magazine.

    Well, David, starting with you, what are we seeing right now? Are Americans still spending?

    DAVID WYSS, Standard and Poor's: Well, Americans are still spending. I think we're seeing some early signs that they're starting to slow down, though. They're getting squeezed by falling home prices, rising gasoline prices, and that's going to leave less to spend at the shopping mall than they were able to spend a year ago.


    And what do you see — staying with you — what do you see in terms of retailers responding, as we begin the holiday season?


    I think we're seeing a lot more discounting than we did a year ago, and I think we'll continue to see that. Also, when you get these kinds of periods, it tends to create a late Christmas, because people know that retailers will get more desperate as Christmas approaches, and the discounts will get better.


    Michael Mandel, what do you see right now?

  • MICHAEL MANDEL, BusinessWeek:

    I think that retailers may be surprised this weekend that they may not get as much shoppers out there buying as they expected. And I agree with David, that the retailers are going to end up panicking after this weekend.


    They're going to end up panicking. I mean, where are we going to see it, in what particular sectors or businesses, or what kind of retail?


    I think you're going to see it across the board. You know, one interesting question about it is whether or not things like consumer electronics are going to stay as strong as they've been in the past. Are people going to be out there buying those big-screen TVs? That's going to be a big question.