The markets are up. From Hasbro to Intel to Apple, companies that rely on retail sales are reporting glimmers of holiday hope.
Could this be the quarter when consumers finally overcome their anxieties and help pull the country out of the Great Recession?
Analysts say the signals remain mixed, despite some evidence the economy has turned a corner at last. Perspective also plays a part, making anything that isn't awful look good - or, as the old lyric puts it, "Been down so long it looks like up to me."
Even if it's already over, the longest downturn since the Great Depression has been a dismal season for retailers. Compared with the year before, 2008's holiday sales were down 3.4 percent, according to the National Retail Federation, which recently predicted an additional drop this year of 1 percent.
Recent data suggest that the final numbers for 2009's holidays could be flat or even slightly positive. But some analysts and companies see more hopeful signs.
Last week, Intel said it expected fourth-quarter sales of $9.7 billion to $10.5 billion, much better than the average $9.5 billion projected in a Bloomberg News survey of analysts. Hasbro reported yesterday that it saw early signs of a rise in fourth-quarter toy sales, a holiday bellwether.
Across much of the economy, September sales were up modestly from August, and better than expected. Excluding sales of motor vehicles and parts, the Census Bureau said, retail sales rose 0.5 percent in September from the month before - albeit still down 4.9 percent from September 2008.
"Retail sales in September were an indicator that we are on a recovery path," said Hemant Sangwan, a consultant at IHS Global Insight Inc. who tracks consumer and retailer activity. He said the rise in retail sales from July through September would generate a 2.9 percent annual increase if the uptick persisted.
Still, Sangwan said that was far from certain, with unemployment rates hovering near 10 percent, housing values depressed, and other sources of economic anxiety.
"The clouds don't look that dark - they can see a ray of hope now," he said. "But there is still some uncertainty in consumers' minds: whether I should spend or not?"
Projections for the fourth quarter vary widely.
Mark Zandi, chief economist at Moody's Economy.com, said he expected this Christmas season's numbers to be at best slightly positive.
"September retail sales were better than we expected, although I'm suspicious that they may get revised," Zandi said. "I think it's going to be a flat Christmas relative to '08."
Toon van Beeck, a senior analyst at IBISWorld Inc., an industry research company, said he expected U.S. retail sales of about $960 billion in the fourth quarter, up 3.3 percent over last year's final quarter, when the economy "fell off a cliff."
Van Beeck said the quarter could be a make-or-break period for some companies. "Retailers can't afford another really bad season. There's still a real chance we might see a double-dip recession. It's really these holiday sales that will show us where we are."
Signs of life in retailing have been boosting the stock market rally. Last night, shares of Apple rose more than 6 percent in after-hours trading after the tech leader reported a 12 percent increase in revenue for the fiscal year that ended Sept. 26, led by strong sales of Macintosh computers and iPhones.
Even so, Wharton marketing professor Stephen J. Hoch said much of the market's renewed faith in retail is about believing that at least a bottom has been reached.
"Things aren't improving," said Hoch, director of Wharton's Jay H. Baker Retailing Initiative. "They're just not getting worse."
For much of the last decade, holiday sales climbed as consumers - encouraged by easy credit, inflated housing prices, and buoyant stock portfolios - shopped furiously.
But a big sign of trouble came in late 2007, when high gasoline prices and rising mortgage foreclosures affected how much consumers were willing to spend at Christmas. Holiday sales came in lower than expected, growing just 2.2 percent.
Then came last fall's credit freeze and stock market crash. Sales dropped 3.4 percent.
Retailers were forced to clear out inventories through what Hoch called "profit-destroying promotions." A number of chains simply went out of business or declared bankruptcy. Luxury stores saw business dry up as shoppers rushed to discount retailers such as dollar stores, Wal-Mart, and T.J. Maxx.
Retailing's woes have helped fuel the economic downturn as chains closed stores, demanded rent reductions, and cut orders to merchandise suppliers. Their troubles have also helped push up unemployment.
For instance, the South Jersey company that owns the Burlington Coat Factory chain cut 9 percent of its workforce in the spring.
Sales continued to fall through the quarter that ended Aug. 29, with the retailer posting a $23.4 million loss.
But on Friday, Tom Kingsbury, chief executive officer of Burlington Coat Factory Investments Holdings Inc., described the company's cost-cutting initiatives as an "ongoing success," saying its adjusted earnings from operations had grown.
Such triage across the board has helped entice Wall Street investors back to retail stocks, even though unemployment may continue to depress consumer spending, Hoch said.
"Once you hit the bottom, then you can start climbing out," he said. Investors are "looking out one, two years ahead of time and saying it's going to be better than it is now. And I'd have to agree with them."
Yet the stock market's optimism, if it persists, may be running ahead of reality.
"It's going to be another tough Christmas," predicted Zandi, of Economy.com. "It's just not going to be the same mess it was last year."