The "Whos" down in "Whoville" has better watch themselves. The Grinch will steal Christmas. But, unlike the ending of the Dr. Seuss book, it won’t be given back to them at the last minute.

Economists have assumed for some time that the holidays will be a bitter time for shoppers and retailers alike. Most have not braced for how awful it will actually be.

For starters, the rich are broke. According to a new Mastercard (MA) survey, sales of items which cost more than $1,000 dropped by about 20% in October. Reuters reports that "Any area that deals with consumer durables, especially areas like furniture, electronics and appliances … that relies heavily on sales purchases that exceed $1,000 in value are under significant pressure."

While most analysts expected that the poor and middle class might have a rough holiday, there was some hope that the well-to-do would have one last joyous holiday before being plunged into the long nights of winter. Those last big pay packages set up for 2008 before the recession took hold would yield some largess to make the kiddies happy before their parents hit the bread lines.

As luck would have it, figures now show that luck has left this galaxy for parts unknown.

Economists still assume that retail sales will be down by 2% or 3% in the fourth quarter. As is often true of people who practice the dismal science, they are wrong again. Anecdotal evidence would put the drop at 5% to 10%. If layoffs drive another several hundred thousand people out of work this month, the Christmas rush for close-out bargains will never materialize.

In the case of retail sales, there is nothing wrong with despair. It is well-placed.

Douglas A. McIntyre

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