Despite weak consumer sentiment, Australians continue to spend. Until recently, Australian retail had been one of the few (and surprising) bright spots among the country’s non-resource sectors.

Indeed, retail sales growth had an unusually strong run during the six-month period that ended in January of this year. Thereafter, with the exception of a decline in May, retail sales continued to grow, albeit at a more sluggish pace.

But in September, Australians opened their wallets and dumped the contents on the sales counter. According to the Australian Bureau of Statistics (ABS), retail sales rose by 1.2% that month, far surpassing economists’ consensus forecast of a 0.3% increase and also well above August’s 0.1% growth.

Household goods retailing was the largest contributor to the rise, with sales up 4.1%. This strong performance was driven by a 9.2% jump in sales of electronic goods, which accounted for roughly half of the growth in retail sales in September, thanks in part to the release of Apple’s iPhone 6.

Consumers also dropped money on dining at cafes and restaurants, with sales in this category up 2%.

Meanwhile, the Westpac-Melbourne Institute Index of Consumer Sentiment plumbed its lowest levels in three years.

The question is what this seemingly conflicting data could portend for the upcoming Christmas season.

Although consumer sentiment has risen slightly off its recent low, Westpac characterized November’s result as disappointing, since it remains 12.5% below its level of a year ago.

In fact, pessimists have outnumbered optimists for nine consecutive months, the longest stretch since the Global Financial Crisis.

Part of this disconnect may be explained by consumers’ assessment of their recent financial health versus expectations about their economic prospects over the coming year. While respondents’ assessment of family finances fell by 4.2% from a year ago, their optimism about the next 12 months rose by 3.1%.

In the near term, however, sentiment is stuck in the doldrums. And since the November survey is considered a leading indicator for the Christmas season, Westpac says these numbers could signal a dismal Christmas for retailers.

For instance, when respondents were asked, “Do you think that you will spend less, about the same, or more on Christmas gifts compared to last year?,” the results were: 38% “less,” 50% “same,” and 12% “more.”

That doesn’t sound too bad until Westpac reveals that the net balance resulting from summing the “more” versus “less” categories is minus 26%, which it says is the worst showing since 2008.

Australia’s strong housing market could be the other explanation for the disconnect between rising sales and sapped sentiment. On the one hand, rising home prices are creating a wealth effect among consumers, while on the other hand there are fears that the country’s housing bubble could be headed toward implosion.

The survey asked consumers, “Whether now is a good time to buy a dwelling.” While the responses showed modest near-term improvement, the overall result is still down by 13.3% from a year ago. And house price expectations are down 14.3% since last year.

But more recent action on the ground suggests that disturbing sentiment may not necessarily translate into lower turnover during the Christmas selling season.

Citi analyst Craig Woolford told The Sydney Morning Herald, “I think the platform is set for a pretty good Christmas; the run-rate of retail sales growth in September was quite encouraging and feedback on October from retailers suggests that things still remain quite healthy.”

Woolford says that gadgets retailer JB Hi-Fi Ltd (ASX: JBH), a constituent of our Aggressive Portfolio, could be well placed to capitalize on demand for iPhones, game consoles and games.

And while Westpac is being a bit of a Scrooge about Christmas, it’s more optimistic about the coming year.

Indeed, Chief Economist Bill Evans believes that the wealth effect–Australians’ wealth has been boosted by AUD1.6 trillion over the past three years due to gains in housing and retirement funds–should continue to boost consumer spending.