Consumers expect to pull back on spending on gifts this holiday season as shoppers prepare for higher prices and an economic slowdown.
This holiday season, consumers expect to decrease average holiday budgets to $1,595 from $1,778, down 10% year-over-year, according to Deloitte’s 2025 Holiday Retail Survey. This prediction runs counter to the National Retail Federation outlook, which puts holiday sales up between 3.7% and 4.2% over last year.
“This year, the season is unfolding against a backdrop of economic uncertainty,” according to the report. “Three-quarters of surveyed shoppers (77%) expect higher prices on holiday goods, and over half (57%) expect the economy to weaken in the next six months—the most negative outlook since we started tracking economic sentiment in 1997.”
With the macroeconomic climate top of mind, it’s important to note that the consulting firm polled 4,270 U.S. consumers from August 27 to September 5. That was well before the start of the government shutdown, which began on October 1, halting payment for federal employees as well as benefits for consumers on assistance.
While apparel is projected to garner the largest share of wallet at 20%, spending will be down. This year, shoppers are expected to spend $240 on clothing and accessories, down from $279 in 2024. While the electronics category is projected to lose the most ground, more consumers indicated their intention to opt for gift cards this year‚ though average spend in this category is projected to be down.
More than half (55%) of those with plans to buy clothing and accessories intend to do so in store.
In general, the budget for self gifts is up this year by 5 percent to $264. Clothing again came out on top with 59 percent of consumers saying they’re likely to pick up something for themselves from this category.
Given the financial concerns, shoppers across income levels are particularly deal hungry this season. Seventy percent of shoppers will engage in three or more value-seeking behaviors this holiday. Eighty-nine percent of respondents are deal seekers, with 49% of this group rating great deals as their top driver when deciding where to shop. That eagerness for a deal is even higher for younger consumers.
Economic pressures are pushing Gen Z to drop spending by 34% and Millennials by 13%, respectively, year-over-year, according to the Deloitte report.
“Younger generations, particularly Generation Z, appear to be reshaping how holiday shopping happens. Not only are they more likely to seek deals (95%) but they’re also turning to social media (74%), AI (43%) and influencers for inspiration and product discovery, and are using digital tools to find the best prices.”
Price also trumps loyalty for the majority of respondents (77%). With 65% of these shoppers intending to abandon preferred brands based on price and 50% willing opt for cheaper retailers over their favorites for the same reason.
One third of shoppers report their intention to lean into generative AI this season, more than double the number in 2024. Over a quarter (26%), will use loyalty points, up from 20% last year. And 71 percent of shoppers say they’ll opt for slower shipping if it means saving money.
“Retailers that can provide high value at both low and high price points this holiday season may be the best position to attract value seekers,” Deloitte said. “Winners will likely be those who stand out by providing value, offering seamless technology to reduce friction and delivering experiences that feel worth the spend.”
—Additional reporting by Noah Zuss
