Hope for holidays

From Intel Corp. to TJX Cos., it’s beginning to look a lot like the retail holiday season will be happier than forecast.

Intel, the world’s biggest chip maker, cited stronger consumer demand in projecting last week that its sales in the fourth quarter would be $9.7 billion to $10.5 billion, compared with a $9.5 billion average prediction in a Bloomberg News survey.

TJX, operator of clothing store chains T.J. Maxx and Marshalls, also raised its fourth-quarter sales estimate to a gain of 3 percent to 5 percent from an increase of 2 percent to 4 percent.

Pier 1 Imports Inc., the Fort Worth, Texas, retailer of imported furniture, said sales at stores open at least a year increased 9.9 percent last month.

“Consumers’ bunker mentality is gradually giving way to more familiar spending patterns,” said Michael Feroli, a former Federal Reserve official who is now an economist at JPMorgan Chase in New York.

Rising sales would be good news for the economy as well as retailers. Consumption accounts for about 70 percent of gross domestic product, so more spending helps the recovery.

UBS Securities in New York improved its outlook for third-quarter growth to 3.5 percent from 2.5 percent after last week’s report on September retail sales came in higher than expected.

GDP fell 0.7 percent in the second quarter; it was the fourth consecutive decline, which would be the longest since such records began in 1947.

“Retail sales offer the most encouraging sign of a more lasting turn in activity,” Robert DiClemente, chief U.S. economist at Citigroup Global Markets in New York, said Friday in a note to clients.

He sees the U.S. economy growing about 2.75 percent in the second half of this year and about 3.25 percent in 2010.

Helping to drive the improvement in consumer spending is a rebound in household wealth, said Steven Wieting, managing director of economics and market analysis at Citigroup Global Markets.

Retail sales excluding automobiles and restaurants might advance as much as 1.5 percent in the holiday season as “frugal fatigue” sets in and shoppers open up their wallets, said Marshal Cohen, chief industry analyst for NPD Group, a Port Washington, N.Y., market research firm.

Sales dropped 4.2 percent a year ago during what the International Council of Shopping Centers said was the worst holiday season in four decades.

“Slowly but surely, the underlying sales performance is inching higher,” said Mike Niemira, chief economist for the trade group in New York. “The retail-sector recovery is starting to unfold.”

Sales at U.S. retailers, excluding automobiles, climbed 0.5 percent in September. The increase, more than twice the 0.2 percent anticipated by 78 economists in a Bloomberg survey, followed a 1 percent gain in August, the biggest in six months.

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