Looking for a sign that this year's holiday shopping season will be slow? Check the back-to-school numbers. As the eight-week-long season (the second most important of the year for retailers) came to a close, it's apparent that sales were down from the past two years.

Analysts estimate total sales growth for the 2007 back-to-school season was near 3 percent — down from 5.9 percent in 2006 and 7.6 percent in 2005 (the highest figure in 10 years, according to ICSC). That's important because the back-to-school shopping season, which runs from the last week of July and goes through the third week of September, accounts for as much as 15 percent of retailers' annual sales and is a bellwether for the all-important holiday sales season.

“If the results come in positive and are on target with what is expected, that bodes well for the mood going into the holidays,” says Stacy Janiak, vice chairman and national retail leader with Deloitte Touche Tohmatsu.

So far, that's not looking like the case. Same-store sales in August came in at 2.9 percent — in line with what has been a sluggish year so far, according to ICSC's index of 47 chain stores. Year to date, monthly same-store sales have been up an average of 2.4 percent. The numbers were up slightly from the 2.6 percent same-store sales gain in July. For September, the projection is 2.5 percent, according to Michael Niemira, ICSC chief economist and director of research.

Among individual retailers, Wal-Mart posted a 3.0 percent same-store sales increase in August as it rolled back prices on school supplies. It was the best month for the retailer since March and above its year-to-date monthly average of 1.4 percent. Among retail sectors, the luxury segment had the best results with same-store sales up 8.2 percent. The teen segment was up 6.2 percent (after declining 6.0 percent in July). Discounters were up 3.4 percent, apparel shops were up 1.9 percent and department stores were up 0.5 percent.

The deflating housing market is the main culprit in the slowdown in consumer spending. In past years consumers were pulling up to $250 billion out of their homes a year through refinancing and home equity lines and spending the cash at the mall. (A research paper by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy estimated that home equity loans funded up to 3 percent of consumer spending by the end of the bubble.) That dynamic has slowed dramatically, according to Jay McIntosh, director of retail and consumer products with Ernst & Young.

Consumers are being further stretched by rising gas and food prices as well as increasing credit card fees, which many banks have raised to cover losses suffered dabbling in the subprime mortgage market. As a result, Americans are being more cautious about how they spend their money and paying more attention to prices, says Craig Johnson, president of Customer Growth Partners, LLC, a New Canaan, Conn.-based research and advisory firm.

A survey conducted in July by America's Research Group, a Charleston, S.C.-based market research firm, illustrates the apprehension among consumers. It found 48.7 percent of parents said they planned to keep back-to-school spending to a minimum this year.

“They are letting their kids live with the jeans and the shoes from last year if they can still fit into them,” says C. Britt Beemer, chairman of America's Research Group. “There are significant price increases at the supermarket, so they don't feel too generous spending on apparel.”

Beemer forecast that most of the back-to-school sales growth would come from discount stores. The survey found approximately 14.5 percent of consumers planned to shop at Wal-Mart, 9.7 percent at JCPenney and 4.8 percent at Target.

Those retailers that stand to lose the most ground this year are specialty apparel chains, Janiak says. Parents are worried about falling housing prices and teens are spending more money on gas, so new clothes are moving to the bottom of shopping lists, she says.