Although it is not yet “feeling a lot like Christmas,” retail analysts in the United States are starting to predict that the Grinch will find little to steal from under the tree this year.

Full-time employment in the U.S. has fallen by almost a million jobs. The unemployment rate is at a five-year high. So it’s not really all that surprising that a recent Deloitte LLP retail spending analysis predicted that the 2008 holiday spending season will be the weakest in 17 years. Deloitte based this view on their latest Leading Index of Consumer Spending which fell sharply in August.

This troubling view of holiday spending was also reinforced by the U.S. National Retail Federation. In a just-released outlook, the federation predicted that spending would increase by a meager 2.2% this year, compared to the ten-year average gain of 4.4%.

In Canada, there are a few indicators that suggest holiday spending in 2008 will not be as robust as it was in 2007. However, the key drivers of spending are definitely not as weak as those south of the border.

The economy has added 52,000 full-time jobs since the beginning of the year, a level equivalent to half a million jobs in the U.S.

The Canadian unemployment rate is only slightly above its 25-year low and near-record numbers of the working-age population have a job, despite slower employment growth over the past few months.

Retailers in Canada are more optimistic about consumer spending in fourth-quarter 2008, according to the most recent CFIB Business Outlook Survey. Their optimism comes primarily from lower energy prices and sustained job growth.

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