Consumer electronics are expected to comprise $21 billion this holiday season, one industry observer said on Monday, representing a 21 percent growth over the $17 billion garnered in 2005.

Consumers’ confidence in the economy is on the rise and the CE [consumer electronics] industry will benefit, said Sean Wargo, analysts director at the Consumer Electronics Association.

CE gifts dominate a quarter of the overall holiday gift giving market. And consumers tend to shop with a ‘one for you-one for me’ mindset during the holiday season. As a result, gifts for others only account for about half of the volume of sales in the fourth quarter.

The organization attributed the product upgrade cycle as a driving catalyst for growth. Declining prices on newer products is also causing an upswing, Wargo stated.

The report also finds that mp3 players are the most wanted item for the second year in a row. Other items include digital cameras, cellular phones, MP3 players, video game consoles, portable CD players, carrying cases, cordless phones, additional memory for digital cameras, laptops and clock radios.