U.S. consumers plan to ease up on their holiday spending for the first time in five years amid economic pressures that are stretching consumers’ wallets.
Holiday spending is set to fall for the first time since 2020 as consumers — thanks to inflation, tariffs, and more — are planning to shop smarter
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U.S. consumers plan to ease up on their holiday spending for the first time in five years amid economic pressures that are stretching consumers’ wallets.
More than 80% of consumers said they plan to cut back on seasonal spending over the next six months, according to PwC’s 2025 Holiday Outlook report published Wednesday. PwC surveyed 4,000 U.S. consumers from June 26 to July 9, with 1,000 respondents per adult generation (Gen Z, millennials, Gen X $TWTR, and baby boomers).
U.S. consumers are in a rough spot. As President Donald Trump’s global tariffs increase costs and as inflation ceases to slow and the job market continues to be weak, consumers are taking hit after hit right before the busiest — and most expensive — time of the year. More than 50% of survey respondents said that during the holiday season, general price increases will likely affect how they spend their money.
On average, consumers are planning to spend $1,552 each — a 5% drop from last year. This is the first “noteworthy decline” since 2020, according to the report, and consumers plan to take an axe to holiday presents by cutting holiday-gift spending by 11%. And worries over tariffs are sharpening the pullback even further. Consumers who said they’re concerned about high prices or item availability because of the levies plan to spend 10% less on gifts than respondents who aren’t concerned.
And that frugality is showing up in how people plan to shop. Almost 80% of respondents said they plan to seek out more affordable alternatives, while 65% will be looking for post-holiday discounts. Online searches for “discount” and “coupon code” are up 11% over the last year, the report found.
Gen Z is leading the holiday pullback: Respondents ages 17 to 28 said they plan to slash their spending by 23%, a sharp reversal from last year, when Gen Zers spent 37% more year-over-year. One in four now say their financial situation is worse than a year ago, and the planned budget cuts mean that “retailers could be fighting harder for a smaller pool of Gen Z’s discretionary dollars this season,” the report said.
Across the rest of the age groups, budgets look sturdier. Millennials plan to spend just 1% less than last year, and baby boomers are going the other way with a 5% increase this season compared with last year.
And those budgets are increasingly being paired with a new planning assistant: artificial intelligence. When it comes to planning holiday travel, 68% of consumers said they’re likely to use AI to compare flights, while 57% said they’d use it to book their travel. About 75% of millennials said they’re likely to use AI for travel recommendations, and about 15% of both millennials and Gen Z said they plan to use AI to help find ideas for gifts.
This year’s holiday shopping season underscores a clear shift in spending — steady demand with some consumers, but an overall pullback that signals tougher terrain ahead.
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