Bankers and retailers will be watching carefully to see whether consumers' holiday-season spending can top last year's explosive performance.

Besides possibly spelling profit or loss for retailers, the period from Thanksgiving to New Year's Day offers huge competitive opportunities for consumer lenders and a chance to size up the health of consumer balance sheets.

This year's season, which officially began Friday, shapes up as a good one. The unemployment rate is at a 30-year low and personal incomes were up 4% after inflation for the first three quarters.

"Real incomes keep expanding at a fast clip, even after the latest surge in energy prices," said economist Don Hilber of Wells Fargo & Co. Last week, crude oil prices hit a nine-year high.

Even with an extra selling day this year, it will not be easy to match last year's holiday buying pace. Retail sales in November and December 1998 surged an extraordinary 6.5% year over year.

This year, the Fed raised interest rates three times, the last on Nov. 16. Mortgage refinancing is at a low ebb, and the housing market, an important gauge of consumer sentiment, is slowing sharply.

The Fed's latest survey shows that 41% of senior bank loan officers reported weaker home mortgage demand in November.

The stock market is well ahead of where it was a year ago and promoting a continued "wealth effect" among consumers, but many stocks remain below summer levels. Consumer confidence remains strong, but also seems to have reached a plateau. So has the flow of new money into stock mutual funds.

Of key importance to bankers, the Federal Reserve recently released encouraging data on household balance sheets. After rising sharply from 1994 through 1997, the consumer debt burden has leveled off. Personal bankruptcies recently slipped below their peak. The reasons behind this shift are not fully clear.

"Consumer and investor psychology are complex and often unpredictable, sometimes defying past patterns," said David A. Levy, forecasting director at the Levy Institute of Bard College, Annandale, N.Y.

Most observers think the trend is attributable to a mix of mortgage refinancing, lower rates, and tighter lending standards, as well as strong income growth after inflation.

However, several of these conditions have changed. Mortgage refinancing has slumped this year as rates have risen, and bankers again are pushing consumer borrowing.

The Fed survey of loan officers found that bankers and other lenders are offering considerably easier credit terms than last year at this time. Accordingly, revolving credit is growing faster than it has in several years.

On the other hand, a major sign points toward an ultimate upper limit on consumer spending and borrowing. The personal savings rate continues to fall. Though no longer negative because of revisions in government statistical calculation methods, the rate fell to 1.6% in September, from 2.3% in August.

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