Alarmed by the financial meltdown, stores nationwide are slapping sale signs on everything from fall sweaters to furniture — frantically trying to attract shoppers who are cutting back.
Some analysts were already expecting the weakest sales growth for the holiday season in 24 years, and with uncertainty roiling the banking system and a teetering economy, they figure Americans will make their lists and check them three or four times.
"I haven't seen this kind of fright since 9/11," said Faith Hope Consolo, chairman of real estate firm Prudential Douglas Elliman's retail leasing sales division. She said stores are "all arming themselves for what is probably the most difficult season across the board."
At malls, shopping districts and on the Web, the discounts are growing desperate. "Up to 60 percent off," say signs at AnnTaylor LOFT stores, "50 percent off" at Old Navy. Restoration Hardware Inc. e-mailed $100 gift vouchers out to customers Thursday for purchases of $400 or more.
Holiday items are starting to flow into stores — and they're expected to be marked down immediately, said Marshal Cohen, chief industry analyst for NPD Group Inc.
Wal-Mart Stores Inc., the world's largest retailer, is opening its Christmas shops a week earlier than last year to lure shoppers. Wal-Mart is also cutting prices on 10 popular toys to $10 each. Holiday catalogs are already arriving in the mail.
But it may take more than sale signs and promotions to spur shoppers, who have been dealing for months with high gas and food prices, weaker job and housing markets and tighter credit.
Many economists predict spending could deteriorate as the problems on Wall Street cascade through the economy, with layoffs expected to rise and frozen credit markets meaning shoppers are having a harder time getting loans and credit lines. Eight in 10 fear the financial crisis will affect them directly, according to an Associated Press-GfK poll.
Noelle Snow, 41, of Deerfield, Ill., said the economic turmoil has made her cut her holiday budget for her two children to $200 from $500.
"I'm just trying to sock away what I can between budgeting for a couple of things that have broken in my house," said Snow, who worries about her job in financial services and her stock funds. "I'd rather put that money toward a couple of things."
Amanda Plummer, owner of Precious Plum, a high-end clothing store in Summit, N.J., a bedroom community for financial executives, said business has slowed in September.
"I am definitely nervous. People are doing a lot more window shopping. Instead of buying four or five items, they are buying one or two," said Plummer.
Nevertheless, at clothing stores in malls, the volume and level of discounting is running about 10 percent more than a year ago, said John D. Morris, an analyst at Wachovia Capital Markets.
Holiday orders from clothing stores were already about 15 percent below last year's, and some stores are now canceling orders, said Arnold Cohen, co-founder of Mahoney Cohen and Co., an accounting firm for the apparel industry.
And industry figures indicate more shoppers are just staying home. Some industry sales forecasts say the holiday season could have the weakest growth since the early 1980s.
As the economy has turned sour, Americans have already been flocking to discounters, buying more store-brand cereals and peanut butter and mending their clothes instead of buying new ones.
For the holiday season, that may mean shoppers will look for more practical gifts instead of luxuries, said Tim Henderson, senior director and consumer strategist at Iconoculture, a cultural trend research company.
Analysts say shoppers this year may try to avoid using credit cards when they do spend.
Rodney Petreikis, 42, and Trina Harmon, 36, who were visiting Cincinnati from Malibu, Calif., said they will be making some of their own gifts and plan to rely on cash for what they do buy.
"I use my debit card instead of a credit card, so I don't end up spending more than I have to," said Petreikis, an actor, director and writer.
Even the wealthy have cut back on status symbols, and could pull back even more as layoffs rise in the financial industry.
Online jewelry seller Blue Nile Inc. told analysts last month the credit crunch is hurting sales of jewelry priced from $2,000 to $15,000 because shoppers can't charge as much on their credit cards.
Prices in consumer electronics have come down dramatically on everything from flat-panel TVs to Blu-ray DVD players in the past few weeks as stores appear to be reacting to a sharp falloff in demand, said Jeff Trester, co-founder of tracking firm PriceSCAN.com.
Throughout the holiday season, business at malls is expected to remain sluggish. The toy business, generally less vulnerable to economic woes because parents tend to cut back on themselves first, could also suffer.
Sherrie Krieg, 63, had been planning another big year for holiday gifts, most likely spending the same $5,000 she spent last year on her family including two grandchildren.
But Krieg said she and her husband, a retired factory worker, who live in Milwaukee on a fixed income and depend heavily on investments, said they will cut that in half because of the market's turmoil.
Her grandchildren, she said, "will have to learn it's not going to be the same."