Holiday sales to jump 4.1% - highest in 3 years

As the economy slowly recovers, U.S. holiday sales are expected to jump 4.1%, the highest increase in three years, says a Tuesday forecast by the largest industry retail group.

Consumer confidence, though sluggish much of the year, will likely pick up in November and December as Americans cautiously open their wallets and look for steep discounts, according to the National Retail Federation.

"It goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions," said NRF President Matthew Shay. "The lagging economic recovery, though improving, is still top of mind for many Americans."

Shay said he expects shoppers will remain "extremely price sensitive" and retailers will need to respond by offering bargains.

His group expects holiday sales, which typically account for about a fifth of annual ones, could total $616.9 billion this year, up a percentage point from 2013 and the highest since 2011 when they rose 4.8%.

The forecast reflects some recent positive economic news — a rising stock market and a surge in hiring last month that helped push down the nation's unemployment rate to a six-year low of 5.9.%. Still, wages aren't rising and the housing market has seen a slowdown.

Given this mixed picture, PwC and Strategy& — formerly Booz & Co. — released a less rosy holiday forecast Tuesday. It expects overall holiday spending will vary greatly by income but will fall, overall, to $684 a household, from $735 last year.

Based on a survey of 2,500 shoppers, it says those who make under $50,000 plan to spend $377 for the holidays, down from $435 last year. Those who earn $50,000 or more plan to spend about the same amount as last year — about $978.

"The spending divide among shoppers is widening, creating two distinct groups that we are tracking — survivalists and selectionists — and retailers must cater to both segments," said Steven Barr of PwC's U.S. retail and consumer practice.