US Holiday Spending Set to Drop 5% Amid Economic Uncertainty

U.S. consumers are expected to reduce holiday spending by about 5 percent in 2025, marking the first significant decline since 2020, according to PwC's Holiday Outlook survey. The average planned spending per person is $1,552, down from $1,638 in 2024, with gift budgets projected to fall 11 percent, particularly impacting younger shoppers like Gen Z who plan to cut back by 23 percent. Economic uncertainty, rising prices, and tariffs linked to President Trump's trade policies are major factors driving this cautious approach, with 84 percent of consumers expecting to scale back spending over the next six months. Despite the spending cutbacks, holiday travel plans remain relatively steady, with about 44 percent of respondents planning to travel, similar to last year. Retailers such as Target, Best Buy, and Home Depot have maintained their forecasts, while Walmart and Abercrombie & Fitch have raised theirs; however, some, like Mattel, have lowered their outlooks due to the uncertain demand. Overall, consumers are focusing more deliberately on essential purchases and are more cautious about discretionary spending amid ongoing economic challenges.