NEW YORK (CNN/Money) - Ghoulish economic news and fears of a war with Iraq have many Americans spooked, but all that hasn't dampened their appetite for huge inflatable pumpkins, glowing green eye masks and witch's cauldrons.

With Halloween little more than a week away, many retailers are having a hard time keeping up with demand for those holiday items, as well as more unusual gear like foam-molded Draculas and moving gravestones. Sales of holiday candy? Pretty sweet, so far.

The sales boost has been welcome by manufacturers and especially by retailers, many of which are struggling with sluggish overall sales.

"All that big stuff, the more expensive stuff, is going," said Al Dorso, owner of the State Fair Superstore, a Belleville, N.J.-based specialty shop whose main business is pool and patio furnishings. "Animated (moving) items that are $250 are flying."

Though Halloween is still just a speck on the retail calendar, compared with Christmas and Easter, profit from sales of costumes, decorations and other spooky stuff is providing a rare treat in a tricky retail environment.

"Other holidays have become less important. Halloween is the exception. It has become more important," said Howard Davidowitz, president of retail consulting firm Davidowitz & Associates.

Life-size, foam-molded Draculas with blinking eyes, gunslingers, moving gravestones, and bone- and spider-web-shaped lights are just a few of the things shoppers are snapping up at Dorso's store.

Wal-Mart Stores Inc. (WMT: Research, Estimates), the world's biggest retailer, is placing more emphasis on outdoor Halloween decorations this year, a company spokesman said. Competitor Target Stores Inc. (TGT: Research, Estimates) is stocking more Halloween merchandise than it has ever done before, a Target spokesman noted.

Though Wal-Mart said Monday that Halloween sales were below plan, people are slapping down $40 for 8-foot inflatable pumpkins and other decorations like flaming cauldrons, more than they have in the past, spokesman Tom Williams said.

And shoppers at Target are filling up the carts with Halloween-theme cookie jars, mugs, yard flags and other kitschy items.

"Halloween is becoming a dominant, if not predominant, season each year, rivaling back-to-school and secondary holidays like Valentine's Day," Target spokesman Douglas Klein said.

The average household is likely to spend $44 a child on Halloween this year, according to a survey by the National Retail Federation, an industry group. Total Halloween spending is estimated at $7 billion, about flat with a year ago. But that's far less than the $201 billion Americans spend each year on Christmas.

Americans will probably spend nearly $590 million just on Halloween home decorations this year, making it second to Christmas, when shoppers spend $2.1 billion annually, according to the NRF.

Dorso, who is devoting the same amount of retail space to Halloween this year as Christmas, 12,000 square feet, believes Sept. 11 may have something to do with this year's strong sales. "People didn't decorate as much for Halloween last year. They were in a funk. This year, they're into it," he said.

Retailers look forward to Halloween because gross margins -- what each sale costs the merchant -- are extremely high, about 40 percent for Halloween items, compared with 18-to-19 percent at the average food chain, Davidowitz said.

And unlike other goods, surplus Halloween costumes and decorations can be carried over and sold the next year. Gross margins are so strong, Davidowitz said, that retailers don't mind eating the cost of storing leftover inventory.

The growing strength of Halloween contrasts with consumers' recent behavior.

Consumers have continued to spend fairly lavishly over the last year, helping to prop up the sluggish economy. But there have been recent signs of a pullback at department stores and other chains, even as people continue to spend on cars and houses, helped partly by savings or cash from mortgage refinancing.

All this has not hurt sales of Halloween gear.

"Historically, when the economy is down a bit, the seasons (Halloween, Mother's Day, Christmas...) tend to be up," Dorso said.

Police and firefighter costumes are among the most popular at State Fair, continuing the Sept. 11 trend from a year ago, he said. Other popular costumes are Spiderman, Josie & the Pussycats, Batman and the Power Rangers. People are also buying outfits tied to "The Munsters," the 1960s television comedy that has found new popularity in reruns on cable television.

At Wal-Mart, SpongeBob SquarePants tops costume sales this year, Williams said. Scooby-Doo and plush animal costumes are also selling well, along with the police, firefighter and Spiderman costumes.

And Target is selling masks with attached costumes, his 'n her costumes such as "tacky tourists" and rock stars for adults, pet costumes for the kids.

Meanwhile, candy makers say sales remain brisk.

"It's looking good this year," said Liliana Esposito, a spokeswoman for closely held Mars Corp., which makes M&M's, Snickers, Twix, Starburst and other brands. "We have to wait a little while, but we're very pleased with what the selling has been so far," she said.

Christine Dugan, a spokeswoman for Hershey Foods Corp. (HSY: Research, Estimates), the world's biggest chocolate maker, said the company's best-selling Halloween items are Reese's Peanut Butter Cups, Kit Kat, Hershey Miniatures, and Almond Joy.