Total sales during the holiday shopping season are projected to fall about 1 percent over last year, even if discount stores offer deep price cuts, says a new national study by Ball State University.

That drop would mean retailers are facing the grimmest holiday sales season in the last five years.

Food sales should see an increase of 3 percent; jewelry sales will be up 0.6 percent; auto sales will be up by 1.5 percent; department stores will see a decrease of 15.7 percent; consumer electronics will be down by 14.3 percent; and furniture sales will be off by 11.5 percent.

Even though the economy shows signs of moderating after suffering through one of the worst economic recessions in decades, many U.S. consumers are wary of spending, said Michael Hicks, director of Ball State’s Center for Business and Economic Research.

“The combination of high unemployment and solid growth in various components of the U.S. economy make this one of the most difficult holiday retail forecasts in recent member,” Hicks said in a statement. “It is not all gloom and doom out there because we are seeing signs the economy is recovering. However, the unemployment rate continues to be high, and will be for some time, and this is putting a damper on shopping. Some people are afraid to spend as freely as in the past.”

" Ball State University article on holiday season sales forecast. ":http://www.bsu.edu/news/article/0,1370,7273-850-63232,00.html

Another report, however, notes more people will go online rather than to a store building to shop.

PC Magazine reported that U.S. online sales are expected to rise 8 percent this holiday season, with mass market retailers who can offer discounts performing best, according to Forrester Research Inc.

The research firm said on Monday it expects online retail sales in November and December to reach $44.7 billion this year, up from $41.4 billion a year ago, providing a bright spot to a retail industry that could see total sales fall.