As the new year dawns and large retailers survey the 2007 holiday season, there's not a lot to be happy about.  With home prices falling, rising energy and other import prices, and a slowing economy, American consumers broke a string of strong holiday shopping seasons in 2007.  Mastercard Advisors reported that holiday sales from November 23rd to December 24th were up 3.6%, or only 2.4% if rising gasoline expenses were excluded. 

The 3.6% increase in holiday spending compares to 6.6% growth in 2006 holiday spending, and 8.7% growth in 2005.

Just a few months ago, the National Retail Federation was predicting a 4% increase for 2007.

Even those modest 2007 sales increases came at a price.  Promotional pricing was widespread, and deep discounts on key toys and other products were available at earlier points in the season than in previous years (see 'Wal-Mart Starts War Early').

Wal-Mart, with more aggressive pricing, does seem to have fared better on the sales front than its competitors, with larger same store sales increases than Target, which did not discount as aggressively.