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Dark Clouds on the Horizon For Retail Sales

The holiday retailing season worked in fits and starts. Between Thanksgiving and Christmas, there were bursts of shopping activity in some weeks or days. On others, the streets (of New York, anyway), were most deserted. Now, it's just mostly deserted.

All in all, retailers had a pretty good, but not superlative holiday season, at least in terms of holiday sales. But another story is being told by the credit card default rate, which was 12% during November. People were "spending" money that they didn't have.

The lie can be maintained for only so long. "Spending money they don't have" has now morphed into "not spending." That is a bad sign for retailers, and the truth will become apparent as the new spending numbers come in during the New Year. Basically, the American consumer has (literally) mortgaged his/her financial future (more on this in a followup piece on housing). This will take a decade or more, to "work out."