Gallup surmises, sensibly, that upper-income Americans are spooked by the continued economic bad times and the crisis in Europe :

With middle- and lower-income consumer spending remaining flat as underemployment remains high, it seems that a recovery in overall consumer spending will depend to a large extent on upper-income consumers. It may be that these consumers, despite having a desire to return to spending, have been spooked by recent signs of a weakening U.S. economy, combined with the oil spill in the Gulf, global financial difficulties, and possibly future tax uncertainties. As a result, upper-income Americans, like other consumers, may be returning to the new normal spending levels of 2009. If this turns out to be the case, it could easily mean a slower economy than many had hoped for as the remainder of the year unfolds.

“America is not at war,” reads a handwritten note at a U.S. facility in Ramadi. “The Marine Corps is at war; America is at the mall.”

It’s a message worth noting as half the country is gearing up to celebrate Memorial Day drinking beer on the beach.

Update: An alert reader just noted that this episode is at least nine months old. Four weeks before Memorial Day, though, the message remains relevant.

From Bloomberg:

Regional mall vacancies rose to 7.1 percent last quarter from 6.6 percent in the third quarter. It was the highest vacancy rate since Reis began tracking regional malls in 2000, as well as the largest quarter-to-quarter jump in vacancies, according to New York-based Reis. More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc. and Sharper Image Corp., filed for bankruptcy protection in 2008 as the credit squeeze and recession drained sales. Vacancies will rise further until the job market recovers, housing prices stabilize and lending resumes, restoring consumer confidence, said Reis.

You could rent “Clueless” these days and it would seem like a period piece. Empty stores at the mall also have a psychological effect – any shopper can see that things look bad, and that may make them leery of spending. Given the increase in consumer spending of the past two decades, that is probably a good thing in the long term. Plenty of people with too much credit card debt could stand a few more empty stores.

It’s true the recession might not go away anytime soon if we (wisely) choose not to spend our way out of it. But then we won’t have double-digit interest payments on our debt, either. The other upside would be that malls might lose their status as the place for pre-teens to hang out, thereby chipping away at the gloss of the shopping gods. There might not be a lot of pleasant memories to come from this economic downturn, but saying goodbye to the mall culture as a permanent fixture in young lives could be the rare bright spot.

(Frank Lynch flickr)

As another Black Friday rolls around, there’s a feeling of desperation — rather than Christmas — in the air.

Competition among online retailers has turned vicious, with deep discounts and free shipping. That makes a shopping trip to the mall ever harder to justify.

There is another reason why consumers may not flood stores this year. Doorbuster specials are old hat by now. Many were launched during the warm fall weather, instead of being reserved to lure shoppers on Black Friday, which is the usual practice. The day after Thanksgiving is called Black Friday because it is when retailers traditionally go into the black as consumers turn out in droves on one of the year’s biggest shopping days.

Illustration by: Matt Mahurin

Still, K-Mart, T.J. Maxx, Burlington Coat Factory and many other stores are pushing layaway programs, a once-popular practice, to get people spending again.

And in the blogosphere, shoppers tout neo-haggling — asking for a discount on everything you can. “I’ve been able to get prices lowered everywhere from the expected (garage sales) to the unexpected (Target),” The Non-Consumer Advocate blogged recently. Macy’s, however, has already issued a statement declaring it won’t haggle.

Everything’s different this year. As consumers know, it’s hard to get in the mood to shop until you drop when it’s the value of your home that’s dropping. Given the dismal economy, some analysts are predicting anemic retail sales and possibly their first-ever annual decline for the holiday shopping season — something that has never happened since the National Retail Federation began keeping records 15 years ago. Typically, holiday sales annually rise by 4 percent.

No one’s counting on anything like that this year. “We think it’s going to be pretty bad,” said Scott Hoyt, senior director of consumer economics at Moody’s Economy.com.

Even retailers discounting like crazy probably won’t be enough to make wary consumers pull out their wallets, Hoyt predicted. Deep discounting by retailers after the Sept. 11 attacks lured shoppers back to stores, but that won’t work this time around, he says, because the economy’s problems are too severe and far-reaching. In a credit crunch, consumers aren’t likely to reach for the plastic to pay for pricey gifts.

“There’s really not a lot of good news out there for consumers, other than lower gas prices,” Hoyt said. “Their wealth is fading rapidly. Their jobs are at risk. We’re seeing consumer-confidence surveys come back at levels that are very low.”

A holiday shopping season gone bust has repercussions that will reach beyond the New Year.

Poor holiday sales may mean bankruptcies for hard-pressed retailers throughout 2009. That, in turn, would swell unemployment rolls as store workers lose their jobs. And bankruptcies would add to vacant square footage in overbuilt malls and shopping centers, said Meghan O’Brien, an Iowa State University economist who analyzes the retail sector.

The retail sector experienced a bubble that mirrored the housing boom, according to O’Brien. Builders created subdivisions, speculating that buyers of houses would show up. New homeowners needed somewhere to shop nearby. So developers built shopping centers full of big box retailers. But retailing, like housing, grew too quickly, with too many stores selling too much of the same thing — think Gap, then Old Navy, then Banana Republic.

After the subdivisions began to fail, retailers were hit, she said. That’s why commercial real estate is in decline, with more malls reporting vacancies and such retailers as The Sharper Image, Linens ‘n Things and Circuit City in bankruptcy.

“Housing and retail are tied together much more than people realize,” O’Brien said. “It’s all gotten so out of control. … [The] retail bubble … is not as severe as housing, but it’s got to go through a correction too. I think it’s going to be a pretty abysmal retail shopping season and a pretty abysmal year ahead.”

Not everyone agrees. David Wyss, chief economist at Standard & Poor’s, said slow retail sales won’t make the recession any worse than it’s already predicted to be. He thinks the economic downturn will be long but not as severe as some fear. Consumers will turn to gifts of value, like gift cards from retailers not in danger of bankruptcy. Wal-Mart, Costco and other discounters should do well, he said.

Scott Krugman, spokesman for the National Retail Federation, remains somewhat optimistic too. Lower gas prices and pent-up demand from consumers who used to spend a lot on gas will combine to bring shoppers into stores. His group predicts that annual sales will increase by about 2.2 percent. He dismissed as “too much gloom and doom” worries by economists that the season will be weaker.

He and O’Brien differ the most, however, on their views of Black Friday.

O’Brien thinks Black Friday is already sliding into irrelevance, and this year will reinforce that trend. Unusually fierce competition among the online retailers — a change from the past, when discounts weren’t so easily found online — gives consumers an excuse not to head for the mall on Black Friday. And shoppers know they won’t necessarily get the best deal that day because nervous retailers are already discounting their merchandise.

The point of Black Friday doorbuster specials was to lure consumers into stores early and keep them there to shop even more. If they don’t come in the door, retailers are going to be hurt. “[Doorbuster specials] created kind of a frenzied environment that was good for encouraging people to spend money,” she said. “But you’d be crazy to do it if you didn’t have to.”

Going forward, O’Brien sees Black Friday becoming “more of a hollow tradition.”

She’s also unimpressed with stores’ layaway plans, calling them a “relic of the past.” She believes the sales tactic will only attract women in their 50s, who are familiar with i — because an entire generation of shoppers has grown up without such programs. As for neo-haggling, she predicts retailers will quickly put the kibosh on it. All of which means fewer shoppers in stores on Black Friday.

Krugman sees the world differently. He described Black Friday as “a national pastime for a lot of consumers,” a ritual of the holiday season, no matter how bad the economy is.

Banks may fail, jobs may disappear and credit could dry up, but “there still will be people waiting in line” outside some store at 6 a.m. on the day after Thanksgiving.

Whether they do show up will go a long way toward determining what kind of holiday season is ahead for the nation’s retailers.