Crunching numbers for his annual holiday retail sales predictions early last month, Wilkes University business professor Anthony Liuzzo looked at key factors -- falling consumer confidence, a lackluster stock market, cooling housing market, higher interest rates and elevated gas prices -- and decided total sales might grow by just 3.5 percent.

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A month later, circumstances are forcing him to reconsider: "I think that maybe I was a little low."

Recent weeks have seen consumers saying they're feeling better about the future, a stock market hitting new highs, fuel costs falling -- as well as a T.M.X. Elmo doll that goes down and gets right back up.

Economists will be watching the September sales results that many retail chains will release today for additional help in figuring out what kind of a Christmas it will be, but there's a sense the holiday shopping season could be stronger than might have been expected in a slowing economy.

"If consumers focus on their longer-term housing gains, they will keep on spending and holiday sales will ring bells of celebration, corporate profits will brighten and Wall Street will ride bulls into the New Year," University of Maryland business professor Peter Morici recently wrote.

The National Retail Federation estimates one-fifth of retail sales take place during the months of November and December, and the industry is already in the midst of its traditional maneuvering to be in the best position to catch whatever sales may come along.

October is prime setup time for holiday displays and store openings are common this time of year. Shoppers will see a new Target this month on McKnight Road and, in East Liberty, a Borders bookstore next month and the region's first Stein Mart discount store -- scheduled to open on McKnight Road in early November -- and its first Trader Joe's discount grocery, which is now hiring for a fourth-quarter launch.

The pressure on merchants to go into the season strong was illustrated Monday when teen retailer Pacific Sunwear said goodbye to its chief executive officer and began searching for a new one.

Paul Caplan, a buyer for S.W. Randall Toyes & Giftes, is feeling reasonably optimistic his Pittsburgh company's stores will have a decent holiday. "I think if you give consumers a reason to buy, they'll buy."

He's hoping to find those reasons in new offerings from various manufacturers, including an MTH Steelers Super Bowl train and a strategy game called Pentago. The new version of Elmo isn't likely to help much since there are very few available to sell.

Sales so far this year are ahead of last year for Werner Jewelers in the Pines Plaza Shopping Center on Route 19. That's made manager Tim Gasper feel more confident about the holiday than in some past years.

"Jewelry is one of the easier things to not buy when you don't have money," he said.

The cautious optimism coming from the local retailers fits the theme among the many national prognosticators looking for a year that will be solid if a bit more subdued than last year.

National Retail Federation economist Rosalind Wells yesterday said retail sales growth has been slowing all year and could slow still more next year but, in the meantime, consumers' urge to splurge a bit for the holidays will be helped by lower energy costs. The trade group is expecting a 5 percent increase in holiday spending, down from last year's strong 6.1 percent but still pretty good.

Others took a similar tone. "We are maintaining a watchful eye on the consumer for symptoms of weakness, but except for some level of moderations, we do not expect to see a significant slowdown as we head into the holiday season," wrote analysts Andrew Bray and Edward Mui for investment research firm CreditSights in New York.

Dr. Morici, at the University of Maryland, noted the shopping public could focus on the recent decline in home prices and try to start saving more -- but he's betting cheaper gas will keep the party going a bit longer.

Not all retailers are affected equally by market shifts.

Home improvement stores could be slowed by the cooler housing market and higher interest rates, said Retail Forward, a Columbus, Ohio, market research firm. It also expects department stores will continue to struggle while supercenters and jewelry stores show growth.

Online retail could grow more than 20 percent, according to Retail Forward, but that area accounts for just 3 percent of all retail sales.

Although he's been encouraged by recent events, Dr. Liuzzo at Wilkes University in Wilkes-Barre still thinks consumers can expect to start seeing discounts around Dec. 10 or so, when stores with too much merchandise will start trying to get things moving.

"I would say there are going to be some good deals," he said. "I think retailers are overestimating [demand]."

Online retailers have heard the message: Consumers who shop on the Internet follow the free shipping offers.

So even as more customers are expect to crowd Internet stores this holiday season, more than 80 percent of online retailers will be using free shipping with conditions to try to bring in the business. Two years ago, a little more than 60 percent did so.

Meanwhile, Internet mall shopping will continue to adapt tools used by traditional stores, with almost 40 percent of retailers offering early shopper discounts and 31 percent rewarding first-time buyers, according to a survey of 2,900 online shoppers and 80 online retailers done for shopping search site Shopzilla and by Shop.org, the online retailing division of the National Retail Federation.

The study also found that almost 40 percent of online retailers planned to start holiday marketing earlier this year.