In its annual holiday sales forecast, global consultancy Deloitte predicts that total holiday sales will climb to between $981 and $986 billion, representing a 4 to 4.5% increase in sales over last year. The growth rate is an improvement over last year’s 2.8% gain. Deloitte also forecasts a 13.5 to 14% increase in online and mail order sales in November through January.

“Debt levels remain at historical lows, and stock market gains coupled with increasing home prices have a wealth effect on consumers, which may encourage increased spending compared with prior years,” said Daniel Bachman, Deloitte’s senior U.S. economist, in a press release.  “Although consumers are watching tensions unfold in the Middle East and Ukraine, the improvement in their economic situation should more than offset the foreign conflicts’ impact on consumer confidence and retail sales. Despite recent events in energy-producing areas of the world, gas prices have held steady, which may also sustain consumers’ spending power.”

In a press release issued today, the National Retail Federation (NRF) announced that sales in November and December '14 are expected to grow 4.1%, marking the first time since 2011 that holiday sales would increase more than 4%. NRF's healthy forecast is based on retail sales, jobs and housing data. "In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard-to-pass-up bargains," said NRF Chief Economist Jack Kleinhenz.

Gerrick Johnson, a toy analyst with BMO Capital Markets, told the Toy Industry Association (TIA) that he predicts fourth quarter toy sales will grow by about 2%. “The consumer appears to be OK – not great, but not weak either,” said Johnson. “I believe the economy may actually be stronger than people think, even though it may not feel that way.”

Johnson said that the arts & crafts and construction toy categories will likely finish the year on a high note. “Construction, while slowing, still seems to be outperforming,” he noted. 

Digital pets are also gaining momentum, while fashion dolls are “cycling down after several years of good growth,” said Johnson.

The enduring popularity of toys tied to this summer’s Teenage Mutant Ninja Turtles (TMNT) movie will boost action figures, though the category is “also seeing a challenge from ‘interactive figures’ like Skylanders, [Disney’s] Infinity and now [Nintendo’s] Amiibo,” he added.

As the toy industry continues to churn out a steady stream of innovative toys, the holiday season will be all about creative play, according to retail giant Target. “These toys encourage children to explore, imagine and discover with classic dolls, marble runs, arts and crafts, and more,” said a spokesperson for Target. “Beyond creative play, Target’s expansive toy assortment offers on-trend choices for boys and girls of all ages, including licensed products from Frozen and TMNT.”

Sean McGowan, senior analyst of leisure & lifestyle at Needham & Co., agreed that licensed toys with tie-ins to blockbusters like TMNT and Frozen will be on holiday wish lists, as well as children’s tablets, of which he is seeing “a growing proliferation.”