NEW YORK (CNN/Money) - Despite the devastating shocks dealt by Hurricane Katrina, some retail watchers say the holiday shopping season may escape unscathed.

"There are lots of viewpoints floating around about how the holidays will fare for the industry. I think the effects of gas prices on consumer spending are exaggerated a bit," said Steven Spiwak, economist with Retail Forward.

Spiwak forecasts 2005 holiday GAFO (general merchandise, apparel, furniture, home furnishings, electronics and office supplies) sales to grow about 5 percent. "That's pretty much been the average for the past five years."

The consensus opinion among economists and retail analysts interviewed for this story is that gas prices, pushed even higher by Katrina, have hurt consumers in the wallet as well as psychologically. But Wednesday's government retail sales report showed that consumers are still in a mood to buy.

Although overall sales fell 2.1 percent, more than economists had forecasted, the drop was driven by decline in car purchases. Outside of cars, retail sales grew 1 percent, double the estimated gain, as other core retail categories, such as consumer electronics, furniture and sporting goods, saw increases.

The November-December shopping period is a crucial time for retailers, accounting for as much as 50 percent of their annual sales and profits. According to the Commerce Department, 2004 holiday GAFO sales came in at $227 billion, up 5 percent from the previous year.

Jay McIntosh, director of retail and consumer products for Ernst & Young, says he expects a competitive holiday season.

"We've had much debate here about the holiday season," said McIntosh. "Higher gas prices have mostly taken more money away from low-income consumers."

But discretionary spending as a whole hasn't collapsed, he said, adding that affluent consumers haven't been much impacted by gas prices. Nevertheless, McIntosh is "slightly tempering" his holiday forecast.

Why?

"Part of the reason is pricing deflation," said McIntosh. "Some retailers, including Wal-Mart (Research), have publicly said they'll be very aggressive with pricing for the holidays. Other retailers will respond to Wal-Mart's move and this will create a deflationary environment. So retailers will need to sell more goods to bolster their topline."

National Retail Federation (NRF) chief economist Rosalind Wells told CNN/Money she's "cautious but optimistic" about holiday retailing. "I may scale back my forecast a fraction to account for all the uncertainty but I won't be slashing my numbers," Wells said.

"Even though gas prices have been going up all summer, consumers are not retrenching much," she said. "Consumer confidence has improved because of the improving employment market."

A lot also depends on the housing market. Analysts say the nation's housing market has made consumers feel wealthier, acting as another buffer against rising energy prices.

UBS economist Jim O'Sullivan is more wary.

"I don't think the holiday season will be as good as last year," O'Sullivan said. "Right now people are facing higher gasoline prices. As winter arrives, the higher cost of natural gas will push up utility bills."

Taken together, the effects of higher gas and bigger bills, he says, will erode consumer spending in the coming months.