Americans – especially Gen Zers – are planning to cut back on holiday spending this year by the most since the pandemic due to tariff fears, inflation and high costs of living.
Shoppers plan to spend about $1,552 each on average – down 5.3% from 2024, according to a PricewaterhouseCoopers survey of 4,000 US consumers.
That’s the first notable drop since 2020, when average spend dropped 7.6% to $1,187.
“Consumers are approaching holiday purchases more deliberately, deciding what matters most, where to scale back and what feels worth the splurge,” PwC said in a press release.
“People are going to keep shopping, but with continuing concerns about tariffs and elevated prices (especially on electronics, apparel, toys, food, and household staples), value-conscious choices are likely to define the season.”
About 84% of consumers expect to cut back on spending generally over the next six months, especially on apparel, big-ticket items and dining out, the survey said.
Spending on gifts is expected to suffer the worst hit – falling 11% to an average spend of $721 compared to $814 last year, according to the survey.
The decline is even more drastic among Gen Zers, those aged 17 to 28, who expect to shrink their gifting budgets by 23% – after a 37% rise in 2024.
That’s a larger decrease than any other generation as young professionals face a tough job market, often without much in savings, according to PwC.
About a quarter of Gen Zers said their financial situation is in a worse place than it was 12 months ago.
More than half of consumers said price increases will likely impact how they spend this holiday season.
That has left retailers facing heightened uncertainty around demand as they head into the crucial holiday season.
Target, Best Buy and Home Depot have maintained their annual forecasts. Walmart and Abercrombie & Fitch raised their outlooks, while Barbie-maker Mattel slashed its forecast.
Aside from concerns that shoppers may cut back on spending, retailers are also facing uncertainty around trade tensions, as new deals and tariff rates continue to roll out from the White House.
While Gen Z’s spend is expected to decline, their foot traffic in stores has continued to increase.
“The traffic for Gen Z in stores has been going up, because they want that experience, but they’re not necessarily transacting in-store,” Kelly Pedersen, partner at PwC, said.
Millennials, Gen X and baby boomers expect to maintain or even slightly increase their spending, according to the survey.
PwC noted that actual purchasing behavior could shift. The survey was conducted in June and July, and uncertainty around tariffs has eased since then – and could continue to do so.
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