US Holiday Spending Expected to Drop Amid Tariffs and Rising Costs

Holiday spending in the U.S. is projected to decline this year, largely due to Gen Z’s concerns over rising costs, tariffs, and living expenses, according to PricewaterhouseCoopers.

A recent report released on Wednesday suggests that consumers expect to cut their seasonal spending by about 5% on average compared to 2024. This would mark the first notable drop since the onset of the pandemic in 2020, as reported by PwC.

Retailers have warned that tariff-related pressures are likely to increase as companies deplete their inventories of goods imported before the rise in tariffs. Walmart Inc. CEO Doug McMillon noted last month that costs are increasing every week, a trend that’s likely to continue.

So far, companies have managed to avoid significant price hikes, prompting consumers to focus their spending on items that offer the best value. While U.S. retail sales have been generally stable this year, economists are expressing concerns due to emerging signs of a weakening job market and rising inflation expectations.

In a survey conducted in June, over 80% of shoppers indicated they plan to reduce their spending in the next six months. The most substantial decrease is expected among Gen Z respondents aged 17 to 28, who anticipate cutting their holiday spending by 23%. Conversely, millennials, Gen X, and Baby Boomers are likely to spend about the same or slightly more than the previous year.

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