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If you think Halloween is scary, try being a retailer in this economy.

Retail sales were reportedly flat in September compared with the same period a year ago, and were 0.7 percent lower than in August, according to a recent report by the U.S. Commerce Department. As we creep into the holiday spending season, the National Retail Federation projects spending in 2008 to rise just 1.9 percent, or to $832.36 per person, the smallest gain since 2002. Total holiday spending will reach $470.4 billion, the federation said.

As a result, retailers are pushing their holiday wares even earlier this year, with Christmas items next to Halloween pumpkins and Thanksgiving turkeys.

"With economic concerns weighing down consumers, retailers are facing incredible challenges heading into the fourth quarter," said NRF chief economist Rosalind Wells. "Retailers are cutting operating costs by whittling back inventory levels and trimming labor costs, but it is nearly impossible for companies to fully counteract a complete pullback in consumer spending."

But the drop-off could mean earlier and better discounts for consumers on hot ticket items like electronics and home entertainment, which receive about 50 percent of their sales during the holiday shopping season, said Marshal Cohen, chief industry analyst at NPD Group, a market research company.

"I think electronics are going to go through an early promotional period," he said. "We'll be lucky to get through October without aggressive promotions."

Meanwhile, items for do-it-yourself projects may see a boost, said the NRF.

Middletown resident Angie Stone said she has made a priority gift list and is collecting items for holiday crafting.

"I'll be hitting up the dollar stores and pottery stores for inexpensive gifts that I can personalize, (like) baking, making jar mix gifts, fleece blankets or scarves, and I'm going to try my hand at beading some jewelry," she said. "You could be making an excellent gift that anyone would love, and it may cost you $5."