That estimate is significantly lower than the 5.2% increase the industry reported in 2010, but it is slightly higher than the 10-year average holiday sales increase of 2.6%.
"The 2011 holiday season can be summed up in one word: average," the federation said in a statement.
Matthew Shay, president of the group, said that retailers were optimistic that strong promotions and lean inventory levels would help them deal with consumer caution during the all-important November and December period, when some retailers make as much as 40% of their annual revenue.
"While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009," he said.
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