The nation's retailers delivered bah-humbug news Thursday, reporting the slowest holiday sales growth in five years.

But toy recalls, lackluster fashions and lousy weather weren't the primary culprits. It was a tight-fisted consumer.

Because consumer spending helps drive more than 70 percent of the economy, the dismal retail news raised new concerns about a broader economic slide. When people stop shopping, it's a strong sign that economic health is faltering.

"People are nervous," said Art Rolnick, director of research and public affairs at the Federal Reserve Bank of Minneapolis, "but recession is not baked in the cake. I still think it's a good economy, fundamentally."

Still, the red flags of stress are everywhere.

American Express and Capital One on Thursday reported weaker credit card spending, more missed payments and a growing number of loan write-offs among its customers.

Job growth has slowed, and the nation's unemployment rate climbed to 5 percent in December. Harvard economist Martin Feldstein on Tuesday predicted that the country has a "better-than-even chance" of heading into recession.

Wall Street analysts say consumer confidence has been shaken by an unprecedented decline in home values. No equity to tap, and bigger monthly payments from adjustable-rate mortgages that have reset, means homeowners have less disposable income.

Those factors contributed to a not-so-Merry Christmas for retailers.

The International Council of Shopping Centers reported Thursday that holiday sales grew just 2.2 percent during November and December, the weakest showing since 2002, when sales grew just 0.5 percent. Its numbers are compiled from 45 of the nation's biggest retail chains.

Target Corp. said its sales increased just 0.6 percent in December compared with last year, after adjusting for a calendar shift that made month-to-month comparisons to last season difficult. The Minneapolis-based discount retailer, usually more immune to shifting economic winds than its competitors, predicted earnings for the last three months of the year likely would drop compared with a year ago.

Cautious consumers saw Wal-Mart as a better shopping destination, perhaps drawn in by earlier and steeper discounts than other stores, including at Target. Wal-Mart reported an increase in December sales of 2.4 percent in stores open a year or more, a key barometer of a retailer's health.

Kohl's saw sales drop 11.4 percent, prompting the Menomonee Falls, Wis.-based retailer to lower its fourth-quarter profit expectations. J.C. Penney fell 7.5 percent. Macy's reported a drop of 1.1 percent for the November-December period, with 7.9 percent coming in December.

For retailers "things are going to be challenging for the next quarter or two," said Jeff Klinefelter, a retail analyst with Piper Jaffray in Minneapolis. "Retailers are saying there's no reason to be optimistic. The best they can do is plan sales conservatively, try to control expenses and make sure they're running inventory levels sufficiently."

Sales tax figures released Thursday by the Minnesota Department of Finance mirrored the sluggish national retailing trend. The state missed its forecast for October and November by about $443,000, collecting about $2.26 billion in sales tax.

And while the national economy has been adding jobs, the state has lost 20,000 jobs between June and November. Unless those numbers pick up, "that's not a slowdown, that's a recession," said state economist Tom Stinson.

"There's no doubt that Minnesota's economy isn't performing the way we're used to seeing it perform," he added.

But while it's true that retail sales serve as an important barometer for the broader economy, consumer spending is notoriously fickle.

"The holiday season is always a combination of the overall consumer mood and specific product-category drivers," Klinefelter said. "This year, despite strong economic headwinds, retailers selling higher end ticket items, such as televisions, performed well. If it was a product consumers wanted, they figured out a way to get it, regardless of the financial constraints."

Jackie Crosby • 612-673-7335