America, the Irrational

Considering the economic forecast, wouldn't it have made sense for Americans to cut back on Christmas spending? Shouldn't we have expected retailers to report drops of 30 or 40%? Oddly, that seems not to be the case.
The report said that in November retail sales sank 5.5 percent compared with a year ago. They were down 8 percent in December, through Christmas Eve. Excluding gasoline, the decrease in holiday sales ranged from 2 to 4 percent.
A 4% drop in spending? Is that a proper consumer response to economic crisis?
Overall online sales declined 2.3 percent compared with the 2007 holiday season, SpendingPulse reported.
The media seems to focus in on anecdotal evidence of meltdown which is not supported by the hard numbers. Here's the headline from TIME.

"No Relief from the Christmas Gloom for Retailers"

Shoppers look for a taxi after hunting for gifts at Toys R Us in New York's Times Square early Tuesday morning, Dec. 23, 2008.
Maybe some retailers are unhappy - being down from the year before isn't cause for celebration - but a drop of low single digits doesn't signify a depression, either.
Usually in the hours before Christmas, the nation's stores are overwhelmed with harried shoppers buying last-minute gifts: books and pearl necklaces and even Uggs, those ubiquitous suede boots. On Tuesday, however, New Orleans' largest shopping mall was eerily empty. There was hardly a soul inside Saks Fifth Avenue to sniff fragrances or poke at the $95 stripped ties at nearby Brooks Brothers. Even the super-sized signs promising 75% discounts failed to lure customers into another upscale men's boutique up the street.
I'm wondering why people are spending so freely. Are they still living in la la land - thinking they can deficit spend forever? Amidst all the angst, Time laments what to me looks like great news.
Another retail group, the International Council of Shopping Centers, reported on Tuesday that same-store sales in November and December may drop as much as 2%. That is more than the previously projected 1% decline and would make this the worst Christmas sales season since 1969.
I think we're in the process of falling off an economic cliff, and they're crying over a 2% drop in sales. What am I missing here?