Black Friday marks the beginning of America's holiday shopping frenzy, but this year's post-Thanksgiving blitz stands as a key test of whether Wall Street's fattening sales forecasts are over-stuffed.

The National Retail Federation recently took the unprecedented step of raising its sales outlook for the season, based on economic indicators showing surprising vitality after a year marred by gloom. The private group hiked its sales forecast for November and December up a full percentage point to a gain of 6% over last year. Still, the figure would mark a slowdown from last year's pace of 6.7%.

Meanwhile, strains on consumer spending remain the prime point of vulnerability for an economy trying to keep its expansion intact. Even while the data stays upbeat, a wide array of anecdotal evidence has retail bulls on pins and needles.

Two factors cited by the National Retail Federation for raising its estimate were strong October sales results and the latest pullback in oil prices.

October sales, according to the government, slipped only 0.1% in the wake of a devastating hurricane season. Economists had predicted a much larger drop. Moreover, the 0.1% decline resulted from weakness in the auto sector, where sales collapsed as manufacturers reined in their aggressive summer discounts. Excluding autos, retail sales rose 0.9% for the month, blowing away estimates.

At the same time, crude oil prices have mellowed considerably from their heights above $70 right after Hurricane Katrina made landfall in New Orleans. Crude futures were recently trading at around $59 a barrel on the Nymex. That's still steep by historical standards and hardly a boon for consumers. The decline could be read as a sign that the energy market is ready to return to earth, but with chaos still rife in Iraq, betting on lower oil prices before the winter chill sets in seems ill-advised.

Ken Perkins, president of Retail Metrics LLC, said the more likely scenario for holiday retailing is that the still-warm weather conditions persisting in most areas of the country in November will postpone heavy home-heating bills until after the holiday.

"Retailers are going to get through this holiday season prior to consumers getting whacked with that first heavy-duty heating bill," Perkins said. "That would offset any lost sales resulting from the warm weather keeping winter apparel on the racks."

Perkins' firm tracked third-quarter earnings for the retailer sector up about 10.6%, compared with the same quarter last year. That reflects solid results from an industry that got hit by a wave of store closings in the hurricane season. The quarter culminated with a rosy forecast from the world's largest retailer,

Wal-Mart

(WMT) - Get Report

, which said it was headed for a "good" holiday season, despite recording its slowest bottom-line growth in three years for the third quarter.

Shares of Wal-Mart crossed over the $50 mark earlier this week for the first time since July, even while its chief rival offered the most chilling data point for its holiday quarter.

Target

(TGT) - Get Report

reported last week its November sales would fall short of its previous guidance for a 4% to 6% gain at stores open at least a year.

"Given Target's prominence among retailers, this is clearly a disappointment and casts some doubt on the holiday shopping season," Perkins said.

Adding to the confusion, the market is getting mixed signals about consumer attitudes heading into the holiday stretch. A Gallup poll conducted in early November showed consumers planning to spend an average of $763 on gifts this holiday season. That estimate is up from the $730 that Gallup recorded the same time a year ago.

On the other hand, WSL Strategic Retail said its research showed that 53% of shoppers across the country said they will spend less on holiday gifts this year than they did in 2004. That number is almost double what it was last year, when 29% of shoppers said they would spend less. Of those planning to tighten their budgets, 44% said they will spend less because of rising fuel prices, and 65% said there is nothing new and interesting to buy.

The Consumer Federation of America and the Credit Union National Association reported that a third of respondents to their joint survey said they expect to spend less this year than they did last year. Those two groups are predicting a 5% gain in sales for the season, compared to last year's November-December period.

Also, the Conference Board said it expects U.S. households to spend an average of $466 on gifts during the holiday season, down from last year's estimate of $476, based on its recent survey.

"Consumers appear to have less Christmas spirit heading into Thanksgiving this year than last year," said Lynn Franco, a spokeswoman for the Conference Board. "This cautious attitude will have consumers shopping for bargains this season. Retailers will need to offer discounts and promotions to get shoppers into their stores."

A majority of retailers have indicated that discounts and promotions will be especially aggressive this season as they vie for their piece of a smaller pie. Wal-Mart, which blundered last year by waiting too long to crank up holiday promotions, said it will be slashing its trademark low prices right out of the gate.

Along with prices, earnings estimates for the sector are already creeping lower for the holiday quarter. Wall Street is currently forecasting 12.3% growth over last year's fourth quarter for retailers in the

S&P 500

, according to Retail Metrics LLC. That marks a decline from expectations for 14.5% growth at the beginning of October and 15.8% growth at the beginning of July.

"This is the typical, normal revision pattern that you see at this point in the process," Perkins said. "We expect to see it drift lower to the 10% range before it ends up at around 13%, unless it's a terrible holiday season."

Within the retail industry, many of the trends that dominated spending in 2004 are expected to stay in place this year. Analysts are looking to particular strength in the upscale, luxury market, benefiting retailers like

Coach

(COH)

and

Nordstrom

(JWN) - Get Report

.

Teen clothing chains that have been reaping the benefits of a denim fad are expected to stay hot, with double-digit comps growth predicted for the likes of

Abercrombie & Fitch

(ANF) - Get Report

and

American Eagle Outfitters

(AEOS)

.

Consumer electronics products make up the bulk of this year's popular gift ideas, boding well for

Best Buy

(BBY) - Get Report

and

Circuit City

(CC) - Get Report

. Digital cameras like the Sony Cybershot DSC-T7 or the Nikon COOLPIX 8800, MP3 players like

Apple's

(AAPL) - Get Report

iPod nano, digital televisions like Panasonic's 42-inch plasma and gaming consoles like

Microsoft's

(MSFT) - Get Report

new Xbox are all widely cited as crowd favorites.

Perhaps the biggest threat to Black Friday's success is the Internet. Online sales are expected to rise 22% for the holiday season over the same period last year to total $26.2 billion. But while many shoppers are expected to avoid the crowds in favor of mouse-clicks, they're expected to wait until they return to their computers on Monday to start spending in earnest.

Furthermore, the growing popularity of gift cards promises to extend the throes of holiday shopping into 2006, since the use of gift certificates often leads to add-on sales.

"Things have certainly turned far more favorable for consumers and retailers since September, but it's still expected to be slower than last year," Perkins said. "My sense is that things will turn out to be OK."