WASHINGTON — Don't count on holiday shoppers to fuel the economic recovery.
Sales this time of year are vital to retailers, of course. But they're not nearly enough to drive the economy. Even if holiday sales exceed expectations, the broader recovery is expected to remain weak — for the rest of the year and beyond.
Here's why holiday purchases won't save the day:
• They make up a surprisingly small share of the economy. Last year, gift sales were estimated to account for less than 13 percent of the fourth-quarter's gross domestic product. And Mark Zandi, chief economist at Moody's Economy.com, thinks they'll account for about the same share of this quarter's GDP — the value of all goods and services produced in the United States.
• Many consumers can't get loans. That makes it hard to buy costly items — from cars and homes to appliances and jewelry — related or unrelated to the holidays. Even as the economy returned to growth over the summer, consumers borrowed 0.6 percent less from July through October, according to data from the Federal Reserve.
• Unemployment has hit double digits and is expected to remain near or above 10 percent well into next year, far above a "normal" rate of 5 or 6 percent. Americans without jobs or fearful of losing them aren't likely to splurge any time soon.
• Households are trimming debt. Total household debt — including mortgages, credit cards, autos and other consumer loans — stood at $13.6 trillion in the third quarter of this year, according to the Fed. That's down from $13.7 trillion in the second quarter. Debt reduction is healthy for personal finances but not for economic growth: Consumers pare debt with money they might otherwise spend.
• Most Americans — 80 percent — plan to use cash for all their holiday purchases, according to an Associated Press-Gfk poll. Using cash is a way to stick to budgets and avoid large impulse purchases.
And usually as recoveries begin, the economy roars to life as pent-up spending is lavished on cars, clothes, homes and appliances.
Not likely this time.
With credit tight and joblessness high, no one expects shoppers to provide enough punch to power the recovery.
As long as consumers and small businesses remain unable or too cautious to borrow and spend — during and after the holidays — the recovery is likely to make only fitful gains.
"Unless banks become more willing to lend, there is just no way we can have a durable economic recovery," said Bernard Baumohl, chief global economist at the Economic Outlook Group.