ou might have noticed something amiss in the 2002 holiday shopping season: fewer salespeople working the floor, a deeper discounting of merchandise before Christmas and, by gosh, where were all the shoppers? The numbers are in for holiday sales, and they aren't pretty. But was it as bad as we think?

The Wall Street Journal has officially called this year's holiday shopping season "crummy." This comes as no surprise. Companies slashed 101,000 jobs in December 2002, leaving the unemployment rate at an eight-year high of 6% at the close of the year, and a recent consumer credit report shows consumer debt posted a $2.2 billion decline in November 2002.

Same-store sales data points to a disappointing season as well. The data (also known as "comps") shows the worst holiday shopping season since 1970, when same-store sales first were tracked.

Same-store sales compare sales from stores open a year or more, and many consider the figures to be the best indicator of a retailer's health. The numbers help investors evaluate what proportion of new sales comes from actual sales growth, compared with growth from the opening of new locations.

December 2002 same-store sales rose only 1%, not a large enough gain to make up for the 1.1% decline the previous month. That's a meager 0.5% increase for the months combined - two important months that account for 25% of a retailer's yearly revenues.

Although Gap Inc. and J.C. Penney Co., Inc. surprised many with modest increases in sales, department stores and mall-based apparel stores such as The Talbots, Inc. and Ann Taylor Stores Corp. did poorly. In fact, retailers such as Kohl's; Toys "R" Us, Inc.; Saks Inc.; and Borders Group, Inc. lowered their Q4 2002 earnings outlooks recently, attributing mediocre sales and aggressive discounting in order to move merchandise off the shelves.

Online sales, on the other hand, are picking up. Perhaps six fewer shopping days between Thanksgiving and Christmas last year and free shipping incentives from many online retailers contributed to this increase. Sears, Roebuck & Co. and Best Buy Co., Inc. recently reported that their online revenues more than doubled from December 2001.

According to the eSpending Report from The Goldman Sachs Group, Inc., Harris Interactive and Nielsen//Net Ratings, online spending for the holiday shopping season jumped more than 24% year-over-year to $13.7 billion, up from $11 billion spent in 2001; research from comScore Networks Inc. estimates that online sales increased 28% to $13.8 billion from $10.8 billion last year. (The U.S. Department of Commerce's U.S. Census Bureau e-commerce numbers will not be available until February 2003.)

More good news: The Commerce Department recently reported that overall retail sales rose 1.2% in December 2002, thanks to a boost in discounted automobile sales at the end of the month, when manufacturers slash prices of the current year's models to get ready for next year's.

So what does all this mean? Not as much as we think, according to Tom Redburn, a columnist for the New York Times. "Real" retail sales, says Redburn, are adjusted for changes in the price of goods and actually have decreased several times since 1970. Retail sales data does not account for inflation that occurs every year or for deflation in the price of retail merchandise.

"The failure to account for this simple difference leads to a serious misunderstanding of the economy," Redburn wrote.