The holiday season is shaping up to be different this year. According to a recent survey by PwC, Americans are planning to spend about 5% less during the holidays. The biggest shift is coming from Gen Z, who expect to cut their budgets by 23%. This is a marked change from 2024, when they anticipated a 37% increase in spending.
With economic uncertainty hanging over us, many households are thinking carefully about their holiday purchases. People want to prioritize value, deciding what to splurge on and what to skip. A significant 25% of Gen Z respondents feel their financial situation is worse than last year, compared to just 17% who felt that way in 2024.
Ali Furman, a consumer markets expert at PwC, explains this trend by highlighting that Gen Z is facing new financial challenges. Many are entering adulthood while also dealing with job insecurity and inflation. “It’s a coming-of-age story,” Furman notes. Some young adults are now buying homes and starting families, which compels them to budget more wisely.
While Gen Z is cutting back, Millennials and Gen Xers are mostly maintaining their holiday spending, and Baby Boomers are the only generation planning to spend more—about 5% this year.
Anzhelika Parenchuk, a 23-year-old doctoral student, is among those who are tightening their belts. She shares her experience of turning to discount stores for gifts. “They have the same things but cheaper,” she points out, reflecting a growing trend among young shoppers to seek affordable options.
Gen Z also shows a preference for spending on experiences rather than gifts. A survey by Merge revealed that 86% of young adults admit to overspending on events, indicating they still want to enjoy life even if they cut back on other purchases. The mindset of “affordable exclusivity” is becoming popular, where these young adults seek high-quality items at reasonable prices.
Retailers that cater to budget-conscious shoppers are thriving. Companies like Dollar General, Five Below, and Walmart have seen better-than-expected sales recently, while stores targeting higher-income shoppers, such as Target, are struggling.
According to a survey by RetailMeNot, consumers are planning to spend about 15% less this holiday season. Many are worried about rising prices and are ready to switch brands or shop early to find better deals. Expert Stephanie Carls states that shoppers are “spending with purpose” this year, carefully planning their purchases.
As prices continue to rise, many are feeling the pinch. Parenchuk emphasizes the difficulty of managing her budget, noting that what used to cost $10 can now feel like $20. To cope, she has started limiting her spending further, stating, “Get cash, and once you’re out, you’re out.”
This shift in spending reflects broader economic trends, with value-driven choices shaping consumer behavior. As we approach the holidays, it’s important to recognize that many are navigating financial pressures while still wanting to enjoy the season.
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