Americans are expected to rein in spending this holiday season by the most amount since the pandemic, as they continue to face pressure from high prices and tariffs.
That’s according to a new survey released by accounting firm PwC on Wednesday, which predicts Americans this year will reduce holiday spending to $1,552 a person on average, which is 5% less than in 2024. That includes spending on gifts, travel, food and entertainment.
If the predictions come to pass, it would represent the most significant drop in holiday spending since 2020. While consumers are not cutting purchases entirely, they are getting smarter about how they stretch their dollars, according to Alison Furman, PwC’s consumer markets industry leader.
“Inflation is kind of creeping in, and they’re seeing it affect their wallets,” Furman told CBS MoneyWatch.
For its report, PwC surveyed 4,000 Americans from Gen Zs to baby boomers over a two-week period from June to July, when tariff-related uncertainty was more pronounced. But any perceived changes in the economy over the next couple of months could alter consumers’ attitude toward spending.
“Economic signals continue to shift and, between now and December, purchasing behavior could evolve in response,” the report states.
The generation expected to tighten their spending the most is Gen Z. Respondents from this cohort, ages 17 to 28, said they expect to reduce their holiday budgets by 23% — more than any other generation in the study. That’s due in part to the tough job market facing young Americans, along with rising costs.
Overall, 84% of consumers expect to cut back spending in general over the next six months, according to the report.
A slowdown in spending could spell trouble for retailers who depend on holiday sales to shore up revenue toward the end of the year. Since 2019, holiday sales during the months of November and December have accounted for 19% of total retail revenue for the year, according to a National Retail Federation report.
Tariffs, high prices top of mind
The projected pullback in consumer holiday spending underscores Americans’ shaky confidence in the state of the economy. Worries over inflation and tariffs have already led shoppers to be more judicious with their spending.
Discretionary spending on categories like indoor and outdoor dining were down in August, according to the U.S. Conference Board’s latest consumer confidence index each month. Meanwhile, average 12-month inflation expectations among consumers increased to 6.2%, from 5.7% in July.
Tighter spending
PwC expects consumers to approach holiday shopping “more deliberately,” with an eye toward saving money, amid ongoing concerns over tariffs and high prices.
Furman said the potential for tariff-related price increases has already made the consumers “very conscious of trying to buy things at a discount.”Case in point: Internet searches for “discount” and “coupon code” have climbed by 11% over the past year, according to the survey.
With deals in mind, consumers are expected to do a large portion, or 39%, of their total planned holiday gift spending, during the time between Thanksgiving and Cyber Monday, according to the PwC report. With heightened traffic expected during that five-day stretch, Furman advises shoppers to start looking early for popular items.
“If you’re interested in very hot items, knowing that they’re going to likely be on shelves sooner, to guarantee that you’ll get them, you may want to shop for them in those early promotional cycles, versus wait until the five-day frenzy,” she said.
