The unemployment rate hit a 26-year high yesterday, but the Grinch hasn't nabbed Christmas just yet. While the government said that joblessness soared to 10.2 percent last month, some say the holiday shopping season won't be doom-and-gloom. "Our customer base is being very pragmatic, and we're not getting overly optimistic," JCPenney Chairman and CEO Mike Ullman told The Post. "Still, we're not throwing the holidays under the bus." That kind of prediction may be tough to swallow, since many economists consider the jobs market to be the most important indicator for consumer spending. Heightening the sense of crisis, the Obama administration yesterday extended unemployment benefits and the $8,000 tax credits for first-time homebuyers that were set to expire this month. Meanwhile, the Federal Reserve said consumer credit shrank in September, building on a record eight-month run as banks continued to clamp down on loans. Still, historical data on employment and retail sales can reveal surprising trends. Among them: Consumer confidence, which is sure to take a hit from the latest job statistics, doesn't always predict spending. "I do think the numbers will look a lot better than anybody's willing to admit," says Michael Niemira, chief economist at the International Council of Shopping Centers. "We're not looking for a booming holiday, but we are looking for the best in about three years." Shoppers typically start spending before job markets recover, he said. Moreover, the unemployment rate itself is less useful for predicting shopping habits than the rate at which unemployment is falling or rising. In that regard, October's employment figures were bullish, as they represented a decline of only 3 percent versus last year, compared with steeper declines closer to 4 percent during the earlier months of the fall season. Monthly sales reports from retailers this week were generally positive. Luxury retailers like Saks and Nordstrom were a bright spot, boosting speculation that well-to-do women are starting to splurge on shoes and handbags.

Originally published by JAMES COVERT.

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