Despite an extra selling day between Thanksgiving and Christmas, retailers are not optimistic this year. Same store inventories are only about 2 percent higher for many stores (although some of the home electronics and home remodeling stores have at least 5 percent more to sell than a year ago).

The 670,000 seasonal workers that normally pack the stores to help customers will be more than 200,000 fewer this year. In short, there will not be enough goods and help to meet Christmas sales if they are surprisingly strong.

Of course, most of the surveys show that the mood of the people remains subdued. Travel appears to be off more than 6 percent, with air travel 20 percent less than a year ago. Many department stores are experiencing double digit sales declines in their stores. However, sales rise and fall depending upon the news on TV. More terror means fewer sales. Even positive war reports keep customers from finding good cheer because the reports show deprivation and war.

A Roper survey showed that more people are planning to spend less this Christmas than want to spend more or even hold their spending to last year's level. A late October survey of gift giving intentions showed a decline of 5.7 percent in gift giving desires.

Indeed, the latest weekly chain store sales showed a decline from previous year levels following some more hopeful signs earlier in November.

Aside from fears of terrorism, lost paychecks are taking a toll upon Christmas. A million jobs have been lost since the spring. Another half million probably will disappear in the next few months.

Despite all this gloom, Christmas cheer still may develop. Those with paychecks have 2 percent more spending power than a year ago. Stock values are beginning to rise while mortgage refinancings are slashing monthly mortgage payments. Even that terrible consumer debt has been growing much slower than incomes since May.

But most of all, the feelings for family and community that surfaced after September 11 work with Christmas cheer.

In the past few years, retailers have seen the rolex crowd (for those who had to show their wealth on their wrist) and the price hawks. This allowed both Tiffany and Kmart to enjoy improved sales. Today, the rolex crowd either is counting their stock market losses (the first time the stock market will decline for two consecutive years since 1974) or feeling out of place. Jewelry sales are very weak while fashions clearly have not been accepted by most consumers.

On the other hand, the 51 inch and high definition TVs are doing well. Some evidence of a nascent rebound in computers and software also appears to be developing. Clothing sales were even weak on the discount racks until October. Then, a strong rebound developed. Free financing has created the largest monthly auto sales in history.

However, consumer spending is coming in waves. Discounting and favorable news may push sales higher for a week and then weakness reappears. Except for a few toys and those zero interest auto sales, no momentum has developed.

Part of the problem is the absence of effective advertising. Ad revenues probably will fall 8 percent this year as most marketers cannot decide how their messages will be received. Better not to present your products than to offend your customers.

I am still betting on Christmas, although the retailers will need to do some work to get customers excited. They need to reach out to the feelings of community and family and intertwine them with the merchants' goods and services.

I have seen experts assume that sales will be unchanged to only a percentage point higher than a year ago. With more than 2 percent more stores and 2 percent more inventories per store, this would lead to another inventory problem like last year's and cause the recession to continue another six months.

Although economists cannot deal well with psychology, spending capacity, reduced debt, reduced taxes and lower finance charges all work toward stronger sales. I believe that retailer concessions will be needed, but most of the stores will sell those moderate inventory gains. When all the packages are unwrapped, I am expecting retail sales to be nearly 4 percent higher than a year ago.

Certainly, that is what investors are assuming, or they would not be buying stocks so aggressively. And if I am right, employment might begin to grow again before the winter snows have vanished from the weather forecasts.