For the past two years Germany has been on an economic upswing with this year bringing a predicted growth rate of 2.5 percent.

Rising exports are the primary reason for the humming economy. In the first half of the year, exports rose 10.9 percent when compared with the same period of 2006. But the economic good news doesn't seem to be enough to get shoppers back into the buying mood.

Low wages and higher prices

Several factors have paralyzed consumption. The retail sector has not recovered from a sales tax increase that kicked in at the beginning of 2007, which led to more than a third of retailers seeing their profits shrink during the first six months of the year.

"The value-added tax increase meant many consumers made their long-term purchases in advance last year," said Dirk Mörsdorf of the GfK, Germany's largest market research institute.

Additionally, company profits haven't been passed on directly to employees. While the economic good times helped some unions to bargain for wage increases, those happened recently and employees have yet to feel the extra money in their pockets, Mörsdorf said. Even when they do get the extra money, consumers might not feel ready to go on a buying spree. Energy and food prices have gone up in recent years while wages have been relatively stagnant.

Growth in Europe

The European economy seems to be doing well despite the recent financial crisis sparked by the United States subprime housing market. The European Commission is expecting 2.5 percent growth this year.

"Within the euro zone there are hardly any differences in the economic cycle," said Sandra Schmidt of the Center for European Economic Research (ZEW).

While European consumers are also not indulging in buying binges, they are consuming more than their German counterparts, economists said.

"A disinclination to buy such as exists in Germany is not found in any other EU country," said Alfred Steinherr of the German Institute for Economic Research (DIW).

While in countries such as France, Spain or England, domestic demand is a pillar of the economy; in Germany it plays practically no role.

Germany not likely to change soon

The floundering demand in Germany is not a short-term phenomenon, Schmidt said.

"Domestically, demand has been weak for years, especially in comparison to the USA," she said, adding that German consumers have a very different mentality from their American counterparts. "Germans save money for retirement provisions while the consumers in the USA live on credit."

Since 1982 Germany ranked third in the world for per capita income. Now it's 18th in the Organization for Economic Cooperation and Development (OECD) rankings.

While Germans are unlikely to make big changes to their spending habits any time soon, it's still possible that some of the economic well-being will cause an uptick in consumer spending, economists said. But given consumers' track record, no one is betting the bank on it.