Private consumption has continued to exert a stabilizing effect on the Austrian economy in 1996. With income declining, mainly as a result of the "austerity package", the saving rate decreased, as private households attempted to maintain their accustomed consumption pattern. Before the "austerity package" came into effect at around the middle of the year, consumers engaged in massive pre-emptive purchases, a phenomenon often observed in the past when fiscal levies were announced. These purchases showed up as a slump in sales in the second half of the year. No gains can be expected in retail Christmas sales. The extent of the pre-emptive purchases and the ensuing buying restraint is clearly reflected in the sales performance of retail trade (adjusted for price increases, during the period from January to May sales expanded by 4.8 percent over the same period in 1995, but declined 0.7 percent on average during June to August). The break in the development of consumer spending is even more pronounced in retail sales of consumer durables (January to May +11.7 percent, June to August –2.3 percent; car retail sales +19.0 percent, –10.2 percent). This is due to the fact that purchases of durable goods can be moved rather easily. The volume of pre-emptive purchases was about as high as before the introduction of the "luxury" value-added tax (1978) and the increase in the value-added tax (1984). Retail trade recorded a significant increase in productivity during the first half of 1996. This phenomenon is due to the intensification of competition and rationalization pressures as result of EU membership and to the concentration of purchases in the first half of 1996. In wholesale trade, however, the strong productivity gains recorded in 1995 were not repeated. In the first half of 1996, employment dropped in retail as well as in wholesale trade. Prices were lower than one year earlier (retail –0.3 percent, wholesale –1.6 percent). Given the development of retail sales since the first measures of the austerity package became effective, the outlook for the Christmas business, which is very important in some retail branches, is not very optimistic. In the past, the excess of sales in the fourth quarter above those in the first to third quarter, has served as an indicator for the volume of Christmas sales. This value reached ATS 16 billion on a net basis (net of the value-added tax) in 1995. But in 1996 this indicator may be unduly influenced by special effects (austerity package); the estimate of Christmas sales in 1996 is therefore based on a time series analysis of retail sales. This method points to a decrease in Christmas sales (adjusted for price increases) of about 1 percent. Business might turn out worse than forecast, if people take more trips given the favorable constellation of holidays, better, if shops take better advantage of the opportunities that already exist at the present time to keep their shops open longer hours and thus induce consumers to buy on an impulse.