Horne says the economy looks better than it did when the federation surveyed consumers several months ago. But he also expects other factors - especially lean inventories - to drive gift-card sales.

Last year, when Horne says gift-card sales dipped to $90 billion from $95 billion in 2007, stores were stuck with crowded shelves as the economy imploded. Retailers responded with deep discounts, which discouraged gift-card sales.

"You could buy the $80 sweater for $30, so why buy a gift card?" Horne says. "But this year, what happens when you walk in thinking you're going to buy a sweater for Uncle Louie, and all the sweaters are gone? Gift cards solve a problem."

Why not just give cash?

"We've always given cash for intergenerational transfers. Grandma could give cash to her granddaughters," he says. But in other contexts, cash can seem impolite because it undercuts a gift's symbolic significance. "When you give a gift, you don't want to value the gift. That's why we take price tags off."

Horne says gift cards thrive, ironically, because they are at least a little less crass than cash.

"The idea is that you're giving something that at least won't just be spent on beer and cigarettes," Horne says. "A parent will say, 'I want to give the kid a Borders card so he goes to buy a book.' "

Horne predicts a 5 percent jump in gift-card sales this year, to $94 billion or $95 billion. And he thinks the cards' profitability will be bolstered by the next big innovation: eliminating the plastic cards.

Horne says Apple's iTunes gift cards, which are often just delivered electronically, are an example. Younger consumers don't need to receive an object to welcome a gift. They just want the code to punch into a computer.

"I have a 15-year-old son," Horne says. "He absolutely doesn't care. They're looking at value."