Bah, humbug! Investors in the retail sector should be forgiven if they periodically sniffle this phrase.

It hasn't been a stellar year for most of the big-name retail shops. Macy's (NYSE: M), Dillard's (NYSE: DDS), and J.C. Penney (NYSE: JCP) have seen gut-wrenching erosions in their share prices as previously resilient consumers surrendered a portion of their purchasing power to the one-two punch of plummeting real estate values and ever soaring fuel and energy prices.

As the all-important holiday spending season -- when big retail chains typically hope to rake in up to 20% of their entire yearly revenue -- draws to a close, some signs point to what could end up being the slowest holiday spending season since 2002, when consumers were still reeling from the bursting of the dot-com tech bubble.

In response to lackluster sales, which UBS Securities says rose a mere 2.8% over the 2006 season, some of the nation's largest retail chains are rolling out massive post-Christmas price cuts to lure shoppers back into the stores. There's an estimated $25 billion in gift cards waiting to be redeemed. Did I say discounts? Let me take that back ... I meant an all-out fire sale.

Fire in the hole!          
Earlier this week, Saks Fifth Avenue (NYSE: SKS) enticed shoppers with discounts of up to 60% on its high-end designer apparel: everything from Valentino dresses to Gucci sandals. A quick glance at department store Dillard's website shows nearly the entire inventory, from cashmere sweaters to portable DVD players, being offered at 50% off. Macy's after-Christmas sale slashed prices by up to 65%. Even high-end-brand-specific outlets, such as Ralph Lauren (NYSE: RL), were promoting sales of 60% on luxury handbags.

Such eye-popping sales certainly keep the sleigh bells ringing for shoppers looking to snag a bargain, but they could spell trouble for investors, who have already been punished by lagging sales. The S&P 500 Retailing Index slipped 17% last year, versus a 3% increase for the S&P 500 average.

While post-holiday sales are standard, slashes of this magnitude may signal something closer to a desperate cry for help rather than a dose of holiday giving from retail outlets. Earlier in the week, retail giant Target announced that same-store sales growth may in fact decline in December, after it had forecast sales growth of up to 5% for the month. Ouch.

Santa Bezos
Perhaps the one glimmer of consumer hope comes from online retailer Amazon (Nasdaq: AMZN). Once focused solely on the book market, Amazon now sells a slew of consumer products. Since Nov. 1, Amazon reported sales of well more than 100 million individual products. Amazon shares have shown a polar-opposite performance compared to its bricks-and-mortar peers, with shares up nearly 145% in the past year. And forget about price cuts, Amazon couldn't keep enough inventory of popular items like the Nintendo Wii in stock, selling as many as 17 per second while they lasted.

Keep a watchful eye on big retailers throughout 2008, as their performance will shed light on the pulse of the consumer, and ultimately the health of the economy.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. He appreciates your questions, comments, and complaints. The Fool's disclosure policy made it through the holiday season without receiving one speck of coal.