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Jill Andersen admires the view externality her picture window in Ballard’s historic shopping district, whither the tree-lined sidewalks regularly fill by visitors to the Sunday Farmers Market or nearby watering holes. “Retail heaven,” she calls the neighborhood.

But Andersen, who moved her upscale clothing boutique, Horseshoe, from Fremont to Ballard last month, be possible to’t escape the household cloak forming over this year’s holiday-sales acclimatize.

“Anywhere you go, people are talking about it,” Andersen said shortly before interviewing a job solicitant to assist run her larger, more visible location on Ballard Avenue.

A year agone, the Puget Sound region was considered a bright spot in a national arrangement struggling with a housing-market downturn.

Now, homes locally are distress longer to sell and fetching lower prices when they effect. The global credit turning point has made mortgages harder to get, and lenders are pulling back on home-equity loans, which might have gone toward lavish holiday presents. What’sitting more, stock prices have plunged, leaving many consumers passion less well-off.

Like other retailers, Andersen hopes to do at least a third of her annual business in the final three months of the year. For her, though, the holidays are especially of importance this year: She ordered twice as abundant register. as last year to justify the bigger space — and used credit cards to pay for more than $20,000 of it.

“I love my business, but shortcoming is a scary body,” she said. “Worst process, I think you just cut back on your expenses and ride it at a loss.”

The premises are not encouraging: Taxable sales by retail businesses in King, Kitsap, Pierce and Snohomish counties declined to $7.6 billion in the second quarter, into disgrace 4.5 percent from the same three months in 2007, according to the Washington state Department of Revenue. A first-quarter declination of 3 percent ended five straight years of sales growth for sunken space adjoining the basement retailers.

“The part had been growing much faster than the U.S. economy in recent years but has slowed considerably this year,” said Seattle economist Doug Pedersen, who publishes The Puget Sound Economic Forecaster with another Seattle economist, Dick Conway.

Some reliable sources of spending power can no longer be taken for granted this holiday fit time. About 25,000 Boeing Machinists in Washington state are in the second month of a strike. Microsoft earlier this month related it is reviewing its hiring plans, raising the possibility of slower payroll growth. And JPMorgan Chase, which bought most of Washington Mutual hold out month for the Seattle thrift failed, will betimes decide how crowd employees get to keep their jobs. They’ll find out by Dec. 1.

“In some ways, we’re still doing preferable than the nation. We’re not losing jobs yet,” Conway uttered. “But when the stock is in big trouble, that’s not adage abundant.”

Last month, the Washington Economic and Revenue Forecast Council predicted that the state’sitting fourth-quarter taxable sales will rise slightly from a year go, but that was before the Lehman Brothers collapse and subsequent sell-off on Wall Street.

Nationally, the 2008 festival season is expected to produce the smallest sales gain since 2002. The National Retail Federation’s estimate of a 2.2 percent increase would be down from last year’session disappointing increase of 2.4 percent and moiety the average of the past decade, 4.4 percent.

Camille Carette, a recent Gonzaga University graduate who lives with her parents in North Seattle and works for a downtown public-relations firm, uttered she and her 20-something friends worry about an dubious work at jobs market. So they’re cutting back on their spending, including at the elastic fluid pump.

“Instead of going out to dinner, we all desire go to a grocery store. Everyone choose buy a small something, and we’ll make it together,” Carette, 22, said. “One of my friends has a hybrid car, so we all make her drive.”

Borrowing money to give a good interest for large purchases, such as a new car or dining-room furniture, might not any longer be possible — let alone affordable — for consumers by mediocre credit scores and meager down payments. Greg McBride, senior analyst at Bankrate.com, describes lenders as “looking beneficial to reasons to assert ‘no,’ not ‘yea.’ ” Although reducing consumers’ dependence on borrowed money ultimately puts them and the economy on firmer financial footing, he before-mentioned, “it’s going to be painful in the short term.”

Jan Teague, president and CEO of the Washington Retail Association, predicts retailers that sell less-expensive items, including clothes and small electronics, will fare better than their big-ticket counterparts this holiday season. “Yes, people will buy, but how they buy will change,” she said.

Of course, the economic downturn might not be all poor for consumers. National Retail Federation spokesman Scott Krugman said retailers are suitable to step up promotional activity, such as discounts, to appeal to price-conscious consumers. “It’s going to be surpassingly aggressive, so that probably is going to narrow early and deeper discounts,” Krugman said.

At Fireworks’ five Seattle-area stores, suggested gifts costing $25 or less will have existence displayed together on tables. “We’re looking at merchandising stores in a way that makes it easier for customers to see things at different price points,” said operations manager Pauline Cooper.

Some retailers privilege that although the household confusion hurts them overall, parts of their business are thriving. Jack Schwefel, chief executive of kitchen-products retailer Sur La Table, said more people are buying automated coffee machines instead of between $1,200 and $4,000. He suspects they’re scrutinizing their twice-a-day latte runs to coffee shops and figuring the machines will pay for themselves in a year or brace.

Schwefel noted that Sur La Table does more than a third of its occurring every year business in the ultimate three months of the year. He said it will emphasize “value” to boost sales this holiday season, so that a novel ceramic plate or stainless-steel saucepan is seen as a smart investing..

“It’s not going to be in a landfill next spring,” he said.

Likewise, Andersen praised one of Horseshoe’s top sellers, a blue hooded jerkin for $238, as inconstant enough to wear to operate or at home on weekends. “If you’re going to lay out money money, especially when times are hard, you’re going to buy something you need,” she said.

As she spoke, Andersen was preparing for a jaunt to Los Angeles to look at new spring merchandise, a task she found daunting partly because of the widespread uncertainty.

“The new location is a lot busier than where we were, and I have to factor that in. But at that time, we have this doomsday economy, and you don’t apprehend by what mode that will affect you,” Andersen said.

“Also, we’re going to be electing a new president. Everybody I experience has an Obama button on,” she said. “I think, ‘Oh, lad, if he doesn’confidentially win, it’s going to be unlovely.’ “

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com