## americans are scaling back on holiday spending as economic uncertainty looms

SantaS sleigh is looking a little lighter this year as a sizable number of Americans plan to cut back on holiday spending and, in some cases, not buy gifts at all.

Roughly two in five U.S. consumers (42 percent) say they intend to spend less this holiday season compared with 2024, according to a 2025 Economic Impact Survey commissioned by insurance company Nationwide.

Widespread economic uncertainty has seen Americans cutting back on holiday gifts, according to a separate poll by financial services company Thrivent.

Even with easing inflation, teh high cost of essentials like groceries, utilities, and rent is leaving many to prioritize bills and squirrel away savings over splurging on gifts.

What’s more, the Trump management’s tariffs act like a regressive tax, particularly on lower-income households. They spend a larger share of their earnings on goods, many of which are imported, leaving them with a heavier burden, according to the Senate Committee on Small business and Entrepreneurship.

Consumer Confidence Masks Rising Debt and financial Concerns

Despite reported feelings of financial stability, a growing number of Americans are relying on credit cards, personal loans, and withdrawals from retirement plans to make ends meet, signaling underlying financial vulnerabilities. Recent surveys reveal a disconnect between stated confidence and actual financial behaviors,with many anticipating economic challenges in the near future.

the Rise in Borrowing

Americans are increasingly turning to various forms of borrowing.The use of credit cards has been steadily increasing, alongside a rise in personal loans and, alarmingly, withdrawals from retirement savings accounts. This trend suggests that many households are struggling to cover expenses despite improvements in wages. According to data from the Federal Reserve, consumer credit outstanding reached $7.73 trillion in October 2023, a critically important increase year-over-year.

A Disconnect Between Feelings and Reality

Kathy Bostjancic, Chief Economist at Nationwide, highlights this discrepancy. “Even though many Americans say they feel financially stable today, the way they’re behaving tells a different story,” she noted. While wage growth has occurred, it’s been offset by weak job growth and persistent inflationary pressures, leaving many households vulnerable.

Concerns for 2026 and Beyond

A recent survey indicates that consumers are bracing for potential financial difficulties in the coming years. Key areas of concern include:

• Healthcare Costs: 43% of Americans anticipate challenges with healthcare expenses.
• Debt Repayment: 39% are worried about paying off existing debt.
• Retirement Savings: 34% express concerns about their ability to adequately save for retirement.
• Investment volatility: 31% are anxious about protecting their investments from market fluctuations.

Factors contributing to Financial Strain

Several factors are contributing to this growing financial strain. Persistent inflation, even as it moderates, continues to erode purchasing power.Rising interest rates, implemented by the Federal reserve to combat inflation, make borrowing more expensive. Furthermore, the lingering effects of the COVID-19 pandemic and global economic uncertainties add to the overall financial anxiety.

The Impact of Inflation

Inflation, while cooling from its peak in 2022, remains above the Federal Reserve’s 2% target. This means that the cost of essential goods and services – such as food, housing, and transportation – continues to rise, putting pressure on household budgets. The Personal Consumption Expenditures (PCE) price index, a key measure of inflation tracked by the Bureau of Economic Analysis, provides detailed insights into these trends.

Key Takeaways

• Consumer confidence doesn’t necessarily reflect financial reality.
• Borrowing is on the rise, indicating financial vulnerability for many Americans.
• Healthcare costs, debt repayment, retirement savings, and investment volatility are major concerns for the future.
• Inflation and rising interest rates are key contributors to financial strain.

Looking Ahead

The combination of rising debt and looming economic uncertainties suggests a challenging financial landscape for many Americans. Monitoring economic indicators, managing debt responsibly, and prioritizing savings will be crucial for navigating potential difficulties in the years ahead. Continued attention to inflation and interest rate policies will also be vital in shaping the financial outlook.