Analysts bullish about holidays even with drop in confidence. (Retail).

TAKE heart, there remain a few retail bulls out there this holiday season.

Ernst & Young's 2002 Retail Holiday Forecast projects a 4.8 percent increase in retail sales from early November to late January. A few months ago retail experts were forecasting a paltry 2 percent to 3 percent rise.

Michael Niemira, vice president of the Bank of Tokyo-Mitsubishi believes holiday sales will be up 3 to 4 percent and the National Retail Federation is forecasting that holiday retail sales will increase 4 percent on a year-over-year basis. Deloitte & Touche is coming out with its holiday retail forecast next week.

It's not easy to be cheery about the holidays. Last week, the Conference Board's index of consumer confidence fell in October to 79.4 from 93.7 in September, the biggest drop since the terrorist attacks last year. Plus, the Standard & Poor's 500 Retailing Index fell more than 18 percent last quarter, almost a percentage point more than the overall S&P.

But believers argue that continued low interest rates and a strong housing market would shore up holiday sales. Strong sales are expected in areas such as home furnishings, home improvement products and consumer electronics.

"Last year it was warm and fuzzy things, like blankets and linens and clothing, that sold' said Aubie Goldenberg, an Ernst & Young partner. "This year there is a consumer shift from the warm and fuzzy to more substantial purchases centered around the home."

High-end electronics, such as plasma TV sets, DVD players and digital cameras, are expected to be high on consumers' buy lists-made more tempting by retailers offering low-interest rates or deferred payment plans.