Holiday shoppers may be tightening their belts this year, and for the first time since 2020, retailers could see a notable drop in spending. That’s the takeaway from PwC’s 2025 Holiday Outlook survey, which points to consumers becoming more cautious and more value-driven as economic pressures weigh on household budgets.
According to PwC, the holiday season is usually one of the most predictable times of the year for retailers. But this year, shifting habits, smarter spending, and the outsized influence of younger consumers are making it “less predictable.” The firm projects a 5% decline in average holiday spending compared with 2024, falling to $1,552 per person. Gift budgets are expected to take an even sharper hit, down 11% to about $721. Among Gen Z, who face major life transitions, a soft job market, and limited savings, spending plans are down a striking 23%. At least 40% of overall gift purchases are expected to fall within the five days between Thanksgiving and Cyber Monday.
PwC cautioned that its survey was conducted in June, during heightened uncertainty over tariffs and noted that past consumer behavior has typically shown year-over-year increases in spending. Still, if projections hold, the reduction would mark a turning point after years of growth. Beyond year-end purchases, 84% of respondents said they expect to reduce discretionary spending over the next six months, citing inflation, tariffs and overall cost-of-living pressures. Americans are planning sharper cutbacks on everyday expenses, including a 52% drop in dining out, 36% lower spending on clothing and a 32% cut in purchases of big-ticket items. More than half of respondents also said higher prices in general will shape their holiday choices this year. By contrast, travel and entertainment are expected to rise slightly, with a 1% increase.
The survey also highlighted the impact of tariff worries. Consumers who are concerned about tariffs plan to spend 10% less on holiday gifts, averaging $690, compared to $756 for those who aren’t as concerned. Furthermore, 90% of those worried about tariffs intend to cut back their overall spending, versus 75% among those who aren’t focused on the issue.
Generational differences are stark. Gen Z’s retrenchment is a sharp reversal from last year, when their holiday spending jumped 37% compared with 2023. This year, a quarter of them say their financial situation is worse than it was a year ago, up from 17% who said the same in 2024. Millennials, meanwhile, expect to spend about 1% less than last year, while Gen X is holding steady. Baby boomers stand apart, budgeting for a 5% increase over 2024.
As PwC summed it up, “value-conscious choices are likely to define the season”—an unwelcome message for retailers hoping for a year-end lift.
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