Gloomy retail season

The two busiest shopping days of the season loom in the United States: December 15 and December 22, the last two Saturdays before Christmas.

Yet soft retail sales growth for October and November does not augur well for the holiday season, and suggests that consumer spending -- the main engine for US growth -- will be disappointing during the fourth quarter. With rising gasoline prices and consumer confidence continuing to lag behind last year's levels, research firm ShopperTrak is predicting a 2.5% drop in foot traffic this year.

Excluding gasoline, automobiles and building products, sales have been almost flat after factoring in inflation. The pullback is broad-based, as turnover has declined at department stores, music and bookstores.

The slide in consumer confidence has been abetted by a renewed oil price surge towards nearly 100 dollars per barrel and recent rounds of abysmal housing sector data. Consumer confidence will continue to take a battering as long as the housing sector remains in freefall. While some retailers are optimistic about their prospects over the festive season, retail sales growth is likely to be soft.