The National Retail Federation, a trade group, announced this week that it expects holiday spending to grow between 3% and 4% this year. That would be the smallest increase since 2019, but would still result in at least $957 billion in sales, a record amount.

One reason consumers will likely spend more money this year? 

“Because they have it,” said Jack Kleinhenz, chief economist for the National Retail Federation. 

He said shopping is part of the DNA of the American consumer, and the strong labor market means people feel pretty good spending what they’re earning. 

“If you have a job and you feel secure about the future, that should be a confidence builder in spending,” Kleinhenz said.

Of course, things cost more now too. Prices for goods are up nearly 1% from a year ago, according to the latest personal consumption expenditures index. That means consumers are getting less metaphorical bang for their literal buck. 

“I think inflation is finally catching up with the shopper,” said Sucharita Kodali, a retail analyst with Forrester. 

She expects the higher prices will drive people to buy fewer items. 

“Say you’re buying a Barbie Dreamhouse. In the past, people may have bought a few accessories for that dream house. Maybe you’re just buying the Dreamhouse now,” Kodali said.

Kodali said she expects spending to slow even more in 2024 as people deal with rising interest rates and prioritize other expenses. 

“Things like loan payments, debt repayments, housing payments, they’re all much more important than discretionary items,” Kodali said.

At least Barbie’s Dreamhouse doesn’t have a mortgage attached to it.