Anne D’innocenzio, THE ASSOCIATED PRESS

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NEW YORK - Deep discounts on everything from sweaters to TVs drove U.S. shoppers out of hibernation for the Thanksgiving weekend but the buying was tempered and sales for the traditional start of the holiday season appear at best in line with stores' low expectations.

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THE ASSOCIATED PRESS/ Brian Wallace/Juneau Empire

Michael Mitchell smiles as he lifts his new flat screen television into his truck as his daughter Mikayla watches. Mitchell and his family were shopping Friday,Nov. 28, 2008 at the Wal-Mart Supercenter in Juneau, Alaska, taking advantage of the Black Friday sale.

The sales receipts, however, came at the expense of profits and merchants are facing a big challenge exciting financially strapped shoppers for the rest of the season that's expected to be the weakest in decades.

Retailers - who since mid-September have suffered from the most dramatic falloff in spending in decades amid a ballooning financial crisis - opened their stores as early as midnight Thursday, holding their breath wondering if shoppers would show up for the pre-dawn specials. But while the crowds did come out, analysts say they were thinner than last year and according to some accounts, business fell off sharply for the remainder of the weekend.

Shoppers were also focused on bargains and smaller-ticket, practical items like blenders and video games, as they worry about layoffs, tightening credit and shrinking retirement funds.

Even online spending, once a bright spot in retailing, has been hit hard by economic woes in recent months. ComScore, an Internet research company, reported Sunday online spending was up a modest two per cent for the combined Thanksgiving Day and Friday, compared with the year-ago period.

"I've cut my budget in half," said Laura Bentley, of Miami, who was at the Dolphin Mall on Saturday, her first day of holiday shopping.

"I usually have a spending limit of $50 per person but this year, it's $25,"

Manno and Poun Sam of Houston, who had just purchased some toys, including a Crayola colouring game and a stuffed animal, at a Wal-Mart store in suburban Houston on Saturday, said they were trying to stay within a $500 budget.

"We're not buying anything fancy," said Manno Sam, an assembly-line worker.

"We can't afford it."

New York City-based retail consultant Walter Loeb said he expects sales for the weekend to be below year-ago levels, based on discussions this weekend with key executives from discounters and department stores.

But he added: "It wasn't as bad as some feared...People were buying but they bought cheap and the results were not as good."

Marshal Cohen, chief industry analyst at NPD Group, a market research group, who had a network of analysts at 53 mall locations across the country this weekend, said: "The holiday started off with some promise but quickly moved to concern."

"It could have been a disaster but it wasn't," he said, noting he estimates the weekend's sales were at best even with the same holiday weekend a year ago.

Karen MacDonald, a spokeswoman at Taubman Centers Inc., which operates 24 malls in 11 states, said based on a sampling of malls, business Friday was anywhere from unchanged to up mid-single digits. But on Saturday, sales were unchanged to down slightly.

"Friday was encouraging but Saturday wasn't as good as we hoped," she said.

But Toys R Us chief executive Jerry Storch reported Sunday customer traffic was at least as strong this weekend as the Thanksgiving weekend a year ago and said he was "definitely pleased with sales."

Geoffrey Webb, director of advertising and sales promotions at K-B Toys Inc., said sales for the weekend were equal or slightly better than last year.

"We are very encouraged by the response," he said.

A more complete sales picture of how the Thanksgiving shopping weekend fared won't be known until Thursday when retailers report November same-store sales, or sales at stores opened at least a year.

According to preliminary figures released Saturday by ShopperTrak RCT, a research firm that tracks total retail sales at more than 50,000 outlets, sales rose three per cent to $10.6 billion Friday from the Black Friday a year ago.

ShopperTrak RCT is expected to release data for the combined Friday and Saturday period Monday. Bill Martin, ShopperTrak's co-founder, said he wasn't sure if the momentum was sustained through the rest of the weekend.

The day after Thanksgiving - dubbed Black Friday because it historically was the day when a surge of shoppers helped stores break into profitability for the full year - has been fading in importance.

In recent years, merchants have been pushing earlier the sales and expanded hours that were typically reserved for that day. This year, in a desperate bid to pull in shoppers, stores were even more aggressive, offering discounts of up to 70 per cent in the days leading to the weekend and widening those price cuts for a broader array of merchandise for the early-morning deals.

Aside from the economy, however, Black Friday's early-morning madness has also lost some of its steam because of the abundance of bargains shoppers can find on the Web. Cohen also noted there's less frenzy this year because, with the exception of some isolated hard-to-find hits like Fisher-Price's Elmo Live and Nintendo's "Wii Fit" exercise game, there isn't a particular gift that's a "big standout."

While Black Friday isn't a predictor of the holiday season, it does act as a barometer of consumers' willingness to spend. Complicating matters is a shorter buying season - 27 days between Black Friday and Christmas - instead of 32 last year, putting more pressure on retailers.

Clearly economic woes played a role in how shoppers bought this weekend. K-B's Webb noted consumers were focusing on bargains like a $30 My Happy Family dollhouse, which offered furniture and figures, as part of the retailer's supervalue program. Taubman's MacDonald said practical items did well, like cookware and small home appliances but clothing and electronics also were popular because they were deeply discounted.

The managers of Dillard's and Macy's departments stores at Greenspoint Mall in North Houston both said weekend crowds met expectations, though shoppers seemed to be more bargain-hungry than in recent years.

At the mall's Macy's, one of a dozen in the Houston area, clothing, jewelry and home items - but not high-end brands - were selling well, said manager Ron Misrack.

"People seem to be going to promotional items," Misrack said.

"If you look at our books, you can see the specials and people seem to be going for those items."