The retailer holiday shopping season could be much better than earlier predictions. "Consumers' bunker mentality is gradually giving way to more familiar spending patterns," says JPMorgan Chase economist Michael Feroli. TJX elevated its fourth-quarter sales estimate to a...n increase of 3 percent to 5 percent from a gain of 2 percent to 4 percent. Meanwhile, last week Intel projected $9.7 billion to $10.5 billion in fourth-quarter sales, up from a $9.5 billion average forecast in a Bloomberg News survey.

A boost in sales would benefit the economy as well as retailers, as consumption constitutes some 70 percent of gross domestic product. Citigroup Global Markets economist Robert DiClemente expects the U.S. economy to expand about 2.75 percent in the second half of this year and about 3.25 percent next year. Citigroup analyst Steven Wieting points to a resurgence in household wealth as an important factor fueling the growth in consumer spending.

Retail Metrics president Ken Perkins says that sales at stores open at least 12 months have overtaken analysts' estimates in the past two months and will probably do so again in October. "There is definitely pent-up demand out there," he says. "The chances of an upside surprise in holiday sales are very good." Merchants are trying to persuade consumers to spend more through wider item selections and other incentives.

"Retail Sales Rebound Into Xmas as Shares Show Consumer Not Dead"
Bloomberg (10/19/09) Timberlake, Cotten; Miller, Rich