Consumers struggling with debt are cutting back on luxuries and buying essential items only, if new retail figures are anything to go by.

According to a number of major retailers who reported their figures this week, September was another weak month for consumer spending.

Many - including Target, JC Penny, Kohl's, Saks and Nordstrom - are now expecting a difficult holiday season and have cut their outlooks for the coming months in anticipation of subdued activity.

Dean Hillier, a partner and a retail specialist with AT Kearney, told the International Herald Tribune that this year's Christmas shopping season "could quite frankly be one of the worst we've seen in 25 years".

Even discount retailers are struggling as consumers tighten their belts. While Wal-Mart and Costco both reported solid sales, their results fell below Wall Street estimates.

A recent poll conducted by USA Today revealed that 33 per cent of consumers believe the economy is heading into a period of depression.

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