The National Retail Federation today has predicted that US retail sales in the upcoming 2008 holiday season will rise just 2.2%, hit partly by the recent banking turmoil.

It forecast that sales will reach $470.4bn, falling below the ten-year average of 4.4% holiday sales growth and representing the slowest growth since 2002 when holiday sales rose 1.3%.

"Current financial pressures and a lack of confidence in the economy will force shoppers to be very conservative with their holiday spending," said NRF chief economist Rosalind Wells.

"We expect consumers to be frugal this season and less willing to splurge on discretionary items."

The NRF said that the country's struggling housing market and rising unemployment, accompanied by meager income gains, will continue to hamper consumers throughout the season.

"With the current financial industry crisis continuing to chip away at consumer confidence, NRF does not foresee an economic turnaround until the second half of next year," a statement added.