As the peak shopping period approaches, American consumers are entering the holiday season with unprecedented economic pessimism and expectations of higher prices, according to new survey data. The annual Deloitte holiday survey reveals the most negative consumer outlook since tracking began in 1997, with spending plans declining significantly across nearly all demographic groups.
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Widespread Economic Pessimism Reaches Record Levels
The survey conducted by global consulting firm Deloitte found that 57% of consumers expect the economy to weaken in the coming year, marking the highest level of pessimism in the survey’s 26-year history. This represents a dramatic increase from the 30% who anticipated economic weakening ahead of last year’s holiday season and even exceeds the 54% recorded during the Great Recession in 2008.
Brian McCarthy, retail strategy leader for Deloitte, noted that this outlook suggests consumers may be reaching their limits. “We’ve been talking about the resilient consumer for a while now, that despite all these pressures, the U.S. consumer continues to spend and we keep seeing growth and spending for retail,” McCarthy said. “This outlook is starting to suggest that we’re getting towards the end of that resilience.”
Price Expectations and Inflation Concerns Mount
Seventy-seven percent of surveyed consumers expect higher prices on holiday items this season, up significantly from 69% last year. This comes during the first holiday season following the latest wave of tariff hikes on many imports, adding to existing inflationary pressures that have concerned the Federal Reserve and economic policymakers.
The anticipation of higher costs has directly influenced spending plans, with consumers planning to spend an average of $1,595 during the holiday season—10% less than the $1,778 they planned to spend during the same period last year. This reduction spans across all household income groups and nearly all generations, though some demographic segments show more dramatic cuts than others.
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Generational Spending Patterns Reveal Stark Divisions
The survey uncovered significant generational differences in holiday spending intentions, with younger consumers planning the most substantial cutbacks. Gen Z consumers (ages 18-28) reported planning to spend 34% less this holiday season compared to last year, while Millennials (ages 29-44) expect to spend 13% less.
In contrast, Gen X respondents plan to spend 3% more than last year, and Baby Boomers expect to spend 6% less. McCarthy explained that Gen Z’s sharper spending reduction likely stems from their earlier career stage and greater financial vulnerability. “They’re thinking about income and the job market and the concerns about the economy is going to throw a lot more pressure on them because they haven’t yet had time to sort of build up their savings or plan for less rosy economic environments,” he said.
Younger Consumers Face Multiple Financial Pressures
Mike Daher, U.S. consumer industry leader for Deloitte, highlighted that younger consumers face particular challenges from current economic conditions. The Gen Z age group is “exposed to a lot of inflationary pressures around housing costs,” Daher noted, along with higher prices for everyday items like groceries that strain their budgets.
These findings align with other industry surveys, including one from consulting firm PwC that indicated Gen Z consumers plan to spend 23% less than during the year-ago period. The broader consumer pullback comes as industries across the economy face changing conditions, from energy market expansions to technological advancements in connectivity and supply chain diversification in manufacturing.
Industry-Wide Holiday Forecasts Reflect Caution
Multiple industry forecasts corroborate Deloitte’s findings of moderated holiday spending expectations. Consulting firm Bain & Company projects holiday spending across stores and online will rise 4% year-over-year, below the 10-year average growth rate of 5.2%. Similarly, Adobe Analytics expects online holiday spending in the U.S. to grow 5.3% year-over-year, slower than the 8.7% increase recorded during the previous holiday season.
The PwC survey indicated consumers overall expect to spend about 5% less—averaging $1,552—on holiday gifts, travel, and entertainment compared with the year-ago season. The National Retail Federation, the industry’s major trade group, plans to release its official holiday forecast in early November, providing additional context for retail expectations.
Value-Seeking Behavior Intensifies Across Income Groups
McCarthy identified value-seeking as a dominant theme for this holiday season, with consumers across income brackets actively pursuing savings strategies. Deloitte’s survey found that seven in 10 respondents engage in three or more deal-seeking behaviors, including purchasing store brands, using alternative ingredients, cooking more meals at home, and buying used vehicles.
“Even in the past several months, the firm has found a notable uptick in the number of U.S. consumers who have reported seeking deals,” McCarthy said. This value-focused approach extends to holiday-specific spending, with consumers planning to cut non-gift holiday expenses—such as hosting, clothing, and decorations—by 22% on average.
Gift Spending Shows Relative Resilience
Despite broader spending reductions, gift purchases appear somewhat protected from the cutbacks. Survey respondents plan to buy an average of eight gifts compared to nine last year, while increasing their average gift spending to $536 from $505 in the prior-year holiday season.
This suggests that while consumers are trimming overall holiday budgets, they remain committed to gift-giving traditions, potentially prioritizing meaningful presents over other holiday expenditures. The data indicates that consumers are making strategic choices about where to allocate their reduced holiday budgets rather than cutting across all categories equally.
As the holiday season approaches, these survey results paint a picture of a cautious consumer navigating economic uncertainty through careful budgeting and value-conscious shopping behaviors. The findings suggest retailers may need to emphasize affordability and value propositions to attract holiday shoppers operating with tighter budgets and heightened price sensitivity.
