NEW YORK (AFP) — Strikes by entertainment workers, fears of a looming recession and warnings about toxic toys lining store shelves are all threatening to put a damper on the holiday season in the United States.
With just over four weeks to go until Christmas, US shoppers are expected to be more cautious with their spending this year than usual. Consumer confidence is hovering around a two-year low amid a slump in the housing market.
But as one of the busiest shopping periods of the year kicked off Friday, a day after the Thanksgiving Day national holiday, shoppers in New York seemed in upbeat mood, forming long lines in department stores in search of bargains.
Up to 133 million shoppers were expected to hit US stores over the long weekend, with the National Retail Federation projecting a four percent rise in holiday spending. Ernst & Young forecast growth at 4.5 percent.
"So far, consumers have done an amazing job of ignoring high oil prices, not to mention falling home prices," Standard and Poor's chief economist David Wyss said ahead of the holiday sales season.
"But with gasoline back to more than three dollars per gallon and the winter heating season approaching, will consumers finally flinch?" he said, as oil prices threatened to strike 100 dollars.
While the mood of US consumers looks cautious, industrial action and product recalls have only added to a feeling of gloom ahead of the holiday period.
In New York, a strike by Broadway stagehands has meant disappointment for thousands of overseas and US visitors, while also hitting businesses in Manhattan that rely on theatergoers, such as restaurants and bars.
The strike, called after contract negotiations with theater producers collapsed, enters its third week Saturday with no end in sight. Authorities have estimated the stoppage is costing the city millions of dollars a day.
At the same time, a strike by television and Hollywood writers has already pulled late-night comedy shows off the screen and postponed new productions.
And for all those shopping for children's toys over the holiday season, there was more bad news, as consumer groups warned that store shelves were still stacked with dangerous toys, despite a spate of recent product recalls due to health scares.
The US Public Interest Research Group said its inspectors had found dozens of examples of toys and jewelry with high levels of lead and other poisonous chemicals and parts small enough for a child to choke on.
A series of overseas safety recalls this year targeted Chinese-made products ranging from seafood to car tires, with toys in the spotlight after US giant Mattel recalled 18 million toys, including Barbie Dolls, in August.
One bright spot on an otherwise gloomy holiday picture was online retail sales, which are expected to grow some 15 to 20 percent this year.
But the grim outlook has prompted retailers to offer promotions earlier than usual to ensure they are not left with too much stock.
"Compared to last year at this time, retail spending is distinctly slower as measured by same-store sales, as consumers have been squeezed by higher energy prices and higher mortgage rates," said S&P analyst Gerald Hirschberg.
Lynn Franco, research director at consumer confidence monitor The Conference Board, said last month that weakening business conditions were tempering consumers' assessments of the current economic climate.
She warned that despite the latest figures showing job growth accelerating, slipping confidence could herald lackluster job growth in the months ahead.
While the economy is expected to slow in the coming months, the latest growth and job figures suggest it is ticking along at a healthy pace, at least for the time being.
Copyright © 2009 AFP. All rights reserved. More »
