The U.S. economy is being threatened by everything from the housing credit crunch to high gasoline prices, but John Nikolich has yet to see it.

With all the work I have you'd hardly think there was anything bad going on out there, said the 46-year-old driver for United Parcel Service Inc, the world's largest package delivery company.

Nikolich has been delivering packages for 23 of his 25 years at UPS in this affluent Chicago suburb, which has seen its population more than double to some 140,000 in that time.

A week before Black Friday -- the day after Thanksgiving when America erupts in a torrent of shoppers beginning their holiday buying -- Nikolich's brown van cannot handle all the packages for delivery on his route. UPS must send a backup truck.

It gets crazier every year and this year is no different, said Nikolich, lean and trim from delivering on average of some 350 packages a day to stores in the center of Naperville and homes in the area around downtown.

But while Nikolich's route keeps growing rapidly, the same cannot be said for UPS or its main rival FedEx Corp.

With oil nearing the $100-a-barrel mark, equity home loans drying up and retailers forecasting low fourth-quarter sales growth, analysts say a weak peak season looks inevitable.

With all those headwinds coming together, we're not expecting an overly fabulous peak retail season for anyone this year, said Jim Corridore, an equity research analyst at Standard & Poor's who covers FedEx and UPS.

Indeed, neither company seems to expect much beyond modest package volume growth.

Officials at UPS said in October that its growth this peak season would be slower than in the previous four years. FedEx last week cut its forecast for the company's current quarter that ended November 30, citing fuel costs and weak freight volumes in its trucking unit.

ONLINE BOOST

But the saving grace for this year's peak season? While in-store retail sales will see slight growth, online sales are expected to rise at a far higher pace.

While UPS and FedEx are not immune to an economic slowdown, they should continue to perform well thanks in part to online sales, said Jon Langenfeld, an analyst at R.W. Baird & Co.

Langenfeld has an overperform rating on UPS and a neutral rating on FedEx, which he said is more exposed to U.S. economic weakness due in part to its trucking unit.

On the residential part of his route, John Nikolich delivers everything from gourmet fruit by Harry & David Inc. to a large flat-screen television made by Toshiba Corp.

Many of those goods will be ordered via the Internet.

Although consulting firm TNS Retail Forward has projected the credit crunch will slow overall retail sales growth in November and December to 3.3 percent -- the lowest since 2002 -- bringing the total to some $471 billion.

Though still a small portion of that total, as in previous years online sales should grow much faster than in-store sales. TNS predicts they will jump 18.5 percent to nearly $42 billion.

We do expect to see a rising percentage of package volumes coming from the e-commerce channel, UPS spokesman Norman Black said. This is a trend we've seen for some time and we don't expect that to change. People like shopping online.

In a press release on October 29, FedEx CEO Fred Smith noted that despite slowing overall U.S. economic growth e-commerce will continue to drive holiday spending this year.

Online sales should be a core component of the growth they (UPS and FedEx) are predicting, S&P's Corridore said.

Corridore added he was skeptical Deutsche Post unit DHL, with its smaller U.S. presence, could take market share from UPS or FedEx at this point due to lingering memories of network glitches after DHL bought Airborne Express in 2003.

Apart from that, people will choose UPS or FedEx because they are more familiar with them, he said.

(Editing by Peter Bohan and Maureen Bavdek)

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