Used to be that when you received a gift card for Christmas from a major retailer like Wal-Mart, you'd use it to buy something fun -- say, that new Eagles CD -- and you'd redeem said gift card at the same time you were exchanging that Christmas sweater that looked like it came straight from Bridget Jones's dustbin.

Recession worries, however, are curbing this form of retail therapy. According to a survey by America's Research Group, 15% of those who received gift cards in their Christmas stockings last year turned around and redeemed them in December, compared to 33% in 2006. And when they are redeeming them, it's for socks and peanut butter, not DVDs and silk scarves.

This trend bodes ill for retailers counting on shoppers to ring up post-holiday sales in part by spending more than the value of their gift cards. According to the Associated Press, sales at 43 retailers surveyed by the UBS-International Council of Shopping Centers rose just 0.5% in January, well below the original 1.5% forecast. The council's December survey of stores open for at least a year showed sales increasing by a paltry 0.7%.

In general, retailers who expected sales to increase in January saw their numbers go up, but nowhere near as high as predicted, while those who anticipated losses got a bigger dip than they bargained for. Wal-Mart's sales increased by just 0.5%, far below the 2% expected, while Target's losses were 1.1%, far greater than the 0.6% forecast.

The continued sucking sound from the retail sector is causing some wags to recall analysts' predictions that European travelers would celebrate the holidays -- and the strength of their currency against the dollar -- by turning their American vacations into Christmas shopping sprees. Instead, some NYC store owners are starting to accept euros as payment and either converting them to U.S. currency or squirreling them away for their next European vacation, which seems like a great way to avoid exchange-rate woes.


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