holiday Spending Forecast: A More Restrained Season

Consumers will be approaching holiday gift-giving with more restraint than last year.

According to the latest Holiday Spending Survey from The conference Board, the average consumer plans to spend about $990 on holiday-related purchases. This figure represents a 6.9% decrease from $1,063 in 2024 and is close to holiday spending plans from 2023.

Decline in Gift and Non-Gift Spending

The decline is particularly noticeable in both gift budgets, which fell 3.9% to $650, and non-gift items such as food and decorations, which dropped by 12% to $340. After adjusting for inflation, these figures are at multiyear lows, according to a press release from The Conference Board.

Factors Driving the Decrease

Several factors contribute to this expected decrease in holiday spending. Persistent inflation, while cooling, continues to impact household budgets. Consumers are prioritizing essential spending,leaving less disposable income for discretionary purchases like gifts and holiday decorations. Furthermore,rising interest rates are making credit more expensive,discouraging borrowing for holiday expenses.

Impact of Economic Conditions

• Inflation: Although inflation has slowed, prices remain elevated compared to previous years.
• Interest Rates: Higher interest rates increase the cost of borrowing, impacting consumer spending.
• Consumer Confidence: Concerns about the overall economic outlook are influencing spending decisions.

Spending by Age Group

The survey reveals significant differences in spending plans across age groups. Consumers aged 65 and over plan to spend the most, averaging $1,330. This is followed by those aged 35-54, with an average spend of $1,070. Younger consumers,aged 18-34,anticipate spending the least,at $730.

“Consumers are still willing to spend on the holidays, but they are being more cautious given the current economic environment. They are prioritizing needs over wants and seeking out deals and discounts.”

Key takeaways

• Overall holiday spending is projected to decrease by 6.9% compared to 2024.
• Both gift and non-gift spending are down, with non-gift items experiencing a more significant decline.
• Older consumers plan to spend more than younger consumers.
• Economic factors like inflation and interest rates are major drivers of the decrease.

FAQ

Why is holiday spending expected to decrease?

persistent inflation, rising interest rates, and concerns about the economic outlook are all contributing factors.

Which age group plans to spend the most?

Consumers aged 65 and over plan to spend the most on holiday-related purchases.

What types of items are seeing the biggest spending cuts?

Non-gift items like food and decorations are experiencing a larger decline in spending compared to gifts.

Publication Date: 2025/11/12 00:25:51

Looking ahead, retailers should prepare for a more price-sensitive consumer base. Offering promotions, discounts, and flexible payment options will be crucial to attracting shoppers. Focusing on value and affordability will be key to navigating this more restrained holiday season.