Retail doldrums

The rumblings of retail doom started long before the holiday season officially began. In fact, the dark predictions began back before economists confirmed we were indeed in a recession.

In the middle of November, a survey of shoppers done by the American Research Group showed that the overall planned spending had fallen nearly 50 percent from a year ago. In December, the market research company NPD said that 81 percent of consumers said they were going to cut back this year.

Needless to say, stores were terrified. The holiday season is a key time for retailers, some of which make up to half of their yearly sales in the weeks preceding Christmas. They tried all the tricks: massive sales, discounted add-ons, payment plans, free shipping. Anything to get you and me out to the mall.

But unfortunately, even with all the mark-downs, Santa didn't deliver. It seems Americans really did cut back this year in a big way. On Thursday, most major retailers reported their monthly same-store sales. Let's take a look at how the spending slump affected some of the biggest players:

1) Walmart reported a 1.7 percent gain in same-store sales, well below expectations. Walmart is the nation's biggest retailer, and analysts had high hopes. Experts surveyed by Thomson Reuters predicted a jump of 2.8%. It's definitely a bad omen if even Walmart - famous for its discounted prices - couldn’t get Americans to loosen the purse strings.

2) Department stores fared even worse, with Sears reporting a 7.3 percent drop in same-store sales, and Macy's logging a 5.3 percent sales decline. Macy's further announced it will be closing 11 of its locations, more victims of the current economic turmoil.

3) Smaller chains also felt the pinch: the Gap saw sales fall a drastic 14 percent. Analysts had been expecting a drop of 9.3 percent. The clothing retailer, as a result, revised down its full-year earnings estimate.

That handful of stats is enough to scare even the most stout-hearted economist. Luckily, there are certain hopeful signs on the horizon. The proposed economic stimulus package being touted by President-elect Barack Obama might help in the short run, though it will also further balloon the national deficit. Still, any recovery is going to take a long time so, while 2008 may be a lost cause, maybe by this time next year we will be back on steady ground.

Ali Velshi is CNN’s chief business correspondent and author of the new book "Gimme My Money Back: Your Guide to Beating the Financial Crisis," published by Sterling & Ross. Read excerpts from the book.