IT'S that time of year again. The great festive reckoning. The moment when our collective efforts to garner some happiness at Christmas and celebrate the coming of another year are weighed on the scales of commerce and found materially worthy or seriously materially wanting.

Have we all gone out there in the past few weeks and spent, spent, spent? Or, given the sky-high personal indebtedness we have had to read all about throughout 2007, a fast-cooling housing market, global warming, the credit crunch, Northern Rock and $100 oil, has some prudence prevailed?

Has the plastic been spared too much of a pre-Christmas hammering? And if it has, will we now be rewarded with an especially bleak midwinter, as market gloomsters vie with each other to paint our impending economic prospects in darker and darker hues?

This annual ritual is already well under way, before many of the material facts are even known. For instance, the Sunday papers seemed pretty evenly split on how well Marks & Spencer, a belwether high street brand, had traded in the critical December period.

Sir Stuart Rose's group would prove a winner, suggested The Observer, The Independent and The Mail. Its Christmas sales would disappoint, insisted The Sunday Times and Telegraph. By Monday, the gloomsters had the upper hand on this one. M&S shares took a bit of a drubbing. We will find out tomorrow, when the group gives its own trading update, whether that hit on its shares was justified.

And on Thursday we will find out whether industry whispers about the UK's third-largest supermarket chain, J Sainsbury, missing its internal, pre-Christmas sales and profits targets have any substance. And whether the mark-down in its shares since it escaped the clutches of a Middle East sovereign wealth fund is also justified.

What we have for now are some mixed high street messages. Currys, PC World, Next and Land of Leather self-confessedly struggling to maintain either last year's sales performance or this year's profit expectations. John Lewis and House of Fraser sounding rather more upbeat.

And now comes the latest retail sales monitor from the British Retail Consortium and KPMG, covering December. Overall retail sales growth has stayed in positive territory, albeit by just 0.3% on a like-for-like basis or 2.3% overall.

But such is the belief - among those whose raison d'etre is to sell us more stuff - in the irresistible attraction of retail therapy that December numbers like these, the poorest since 2004, mark, according to the BRC, "a far from merry Christmas on the high street".

There's politics in there too, of course. The Bank of England's rate-setters meet again on Thursday. And BRC director general Kevin Hawkins has used this latest monthly monitor to warn: "Retailers and manufacturers alike need a rate cut now - preferably a full half-point".

He's unlikely to get it. With food price inflation, especially in the dairy sector, already biting into weekly bills and some hefty tariff increases in domestic energy supplies now in the pipeline, the Bank's monetary policy committee will be reluctant to stray too far from its principal script - keeping CPI inflation as close as possible to its 2% central target - by sending too dramatic a message on bolstering consumption.

It is probably too much to ask those who make markets in something as fast-moving as modern retailing to wait until the full picture about festive period demand emerges before making presumptuous demands on economic policy-makers. But that doesn't mean those from whom they are demanding action should give that message more than passing attention.

The MPC delivered a quarter-point rate cut last month. Another half-point this week, delivered before the whole festive retail story is known, against the backdrop of continuing credit crunch fall-out in the financial sector, could very readily be portrayed as a sign of monetary panic.

Hawkins may be right to point to a "very challenging first half" to this new year, some of it driven, as the detailed sectoral analysis within the latest monitor shows, by slowing retail consumption associated with the state of the housing market.

Both the retail and housing markets have enjoyed very good runs in recent years. But it is in the nature of all booms to eventually get ahead of themselves and become unsustainable. Double-digit annual house price inflation could not continue year-on-year-on-year.

That way bubbles beckon. And bubbles eventually burst. Far better, surely, that we manage to moderate our collective behaviour and set a more sustainable course. If we have collectively celebrated Christmas and welcomed 2008 in less than exuberant style, spending only marginally more than we did at the end of 2006, so much the better.

If that very challenging first half turns out to be a soft landing, even retailers would surely raise a glass to that.