• by Sarah Mahoney  @mahoney_sarah, October 3, 2013

The National Retail Federation released its spending forecast for upcoming holiday season, and says it expects holiday sales to increase a so-so 3.9% to $602.1 billion. In a conference call, NRF President and CEO Matthew Shay described the gains as respectable, and ahead of both the 10-year average of 3.3% and last year’s actual increase of 3.5% -- but not as strong as many had hoped.

While “the economic fundamentals ought to suggest a much healthier growth,” Shay says the Washington, D.C.-based trade group tempered its prediction due to much of the uncertainty coming from the U.S. government. 

Shop.org, the NRF’s online division, expects digital sales to increase between 13 and 15%. “Consumers love to shop this way,” he says. “They increasingly expect a seamless transition between channels, and stores have come a long way in offering that.”

This season, Shay predicts, will be intensely promotional and competitive, with stores perhaps starting sales and events earlier, extending hours sooner, and offering more free shipping. But don’t expect any free-for-alls in the price-cutting department: “Retailers have been extremely disciplined about managing their inventory this year.”

In the NRF’s polling about the government shutdown, more than two-thirds of consumers say they do not think it will affect their holiday spending. “But depending how long it continues, that could well change,” he says.

The NRF says its members are optimistic about the coming season, which the group defines as beginning Nov. 1 and ending Dec. 31. That two-month period accounts for 20% of all retail sales, but depending on the store, can represent as much as 40% of annual sales.

Earlier forecasts have been both higher, with Deloitte calling for a gain of between 4 and 4.5% from last year's spending levels, and lower, with ShopperTrak predicting a rise of just 2.4%.