Americans, especially those in Gen Z, are gearing up to reduce their holiday spending this year more than at any point since the pandemic. Concerns over tariffs, inflation, and the rising cost of living are major factors influencing this decision.
On average, shoppers plan to spend about $1,552 each, based on a PwC survey involving 4,000 consumers across the U.S. This marks the first significant decline since 2020, when average spending dipped by 7.6% to around $1,187.
PwC noted, “Consumers are approaching their holiday purchases more intentionally, determining what’s essential, where to cut back, and what feels like worth a splurge.” There seems to be a persistent trend of shopping, but with ongoing worries about tariffs and price hikes—particularly in categories like electronics and clothing—this year’s focus on value will likely shape consumer choices.
Research indicates that 84% of shoppers anticipate reducing their overall spending, with clothing, higher-ticket items, and dining out being the most affected areas. Specifically, spending on gifts is projected to take the hardest hit, with an 11% decrease expected from last year’s average of $814 to this year’s $721.
This declining trend is particularly pronounced among those aged 17 to 28. PwC’s data shows that this demographic is anticipating a sharper drop in spending compared to older generations, largely due to the challenging job market young professionals are navigating.
Around 25% of Gen Zers reported that their financial situation has worsened over the past year. More than half of consumers express that rising prices will likely influence their holiday spending choices.
This uncertainty has retailers on edge as they prepare for the crucial holiday season. While companies like Target, Best Buy, and Home Depot are sticking to their annual forecasts, Walmart and Abercrombie & Fitch have upgraded their outlooks, in contrast to Mattel, which has lowered its forecast.
In addition to worries about consumer spending, retailers are facing volatility due to ongoing trade tensions, with new deals and tariffs emerging from the White House.
Interestingly, while Gen Z’s spending might be on the decline, foot traffic in stores is actually increasing. “Gen Z traffic is rising because they crave the in-store experience, but that doesn’t necessarily translate to actual purchases,” explained PwC partner Kelly Pedersen.
On the other hand, millennials, Gen X, and baby boomers generally expect to either maintain or slightly increase their spending. PwC did mention that actual buying behavior might shift; the survey was conducted in June and July, and since then, some tariffs’ uncertainties have eased, suggesting there’s still potential for change.
