"Christmas was on its way, lovely, glorious, beautiful Christmas, around which the entire kid year revolved."

That was how humorist Jean Shepherd summed up the holiday season in the 1983 film "A Christmas Story," the tale of a little boy's quest for the Christmas present of his dreams, an air rifle.And so it is for millions of children - Christmas is the high point of their year. But this Christmas is a difficult one for many of their parents, who are concerned about the economy and the Middle East and have less money to spend on toys.

Consumers are in a quandary, caught between financial restraints and wanting to fulfill their children's Christmas wishes.

Toy retailers and manufacturers already have felt the pinch. Toys R Us Inc., the nation's biggest toy retailer, suffered a slump in sales after the Iraqi invasion of Kuwait in August that mirrored the drop-off in business throughout the retail industry.

Robert Nakasone, a Toys R Us vice chairman, acknowledged that these are uncertain times, but he expected a merry Christmas nonetheless.

"People may cut back for durables . . . but when it comes down to your kid at Christmas, it's pretty hard to say no to them," he said.

Even in relatively poor economic years, he said, Toys R Us has had some of its best holiday seasons. In 1982, in the midst of the country's last recession, toy sales for the entire industry rose 13 percent.

But some industry analysts were not as sanguine. Daniel Barry, of Kidder Peabody & Co., said toy sales could slip along with other merchandise sales this season.

Perhaps the most sensitive area is video games, which again are on many wish lists this Christmas.

Retailers and video game manufacturers face several unknowns. Given the uncertain business environment, no one is sure how many parents are willing to invest big on Nintendo and other more expensive video systems.