Retailers facing a Q4 “reality check,” per PwC holiday spending forecast
Fast Facts
- 84% of U.S. consumers expect to reduce spending during the remainder of 2025
- Holiday budgets to drop 5% overall – the first decline since 2020
- Gen Z plans the steepest cuts, reducing spending by 23%
- Online and in-store holiday shopping nearly tied at 51% vs. 53%
NEW YORK – The vast majority of U.S. consumers are planning to rein in their spending over the next six months due to concerns about price hikes, tariffs and the higher cost of living.
According to PwC’s 2025 Holiday Outlook survey, 84% of consumers say they expect to cut back in general, especially on dining out (52%), clothing (36%) and big-ticket items (32%). In addition, 53% say that price increases will likely affect their spending decisions for the remainder of 2025.
For holiday, consumers expect to curb their seasonal spending on average by 5% from 2024 – the first notable drop since 2020.
PwC noted that its survey was fielded in June before President Trump paused some tariffs, delayed others and set new levels for most U.S. trading partners.
“Economic signals continue to shift and, between now and December, purchasing behavior could evolve in response,” the professional services network suggested.
Gen Z shoppers plan to make the sharpest cuts, slashing their holiday budgets by 23%. Many consumers in the 17- to 28-year-old cohort are facing major life transitions and seeking careers in a difficult job market, according to the report. And many have little in savings to back them up.
Retailers should fare better during the 2025 holiday season with Millennials, Gen X and Baby Boomers, who expect to maintain or even increase their holiday spending.
Other findings from the report:
Value rules: 78% of consumers are seeking less expensive holiday alternatives and 65% expect to be offered deeper, post-holiday discounts. “Trade-offs are likely to show up in quiet, thoughtful gift adjustments this holiday season and more modest at-home gatherings,” said PwC.
In-store & online shopping choices: Nearly as many consumers (51%) plan to complete their holiday shopping through online marketplaces such as Amazon, eBay and Etsy as those who plan to shop in person (53%).
The in-store lure: The attractions for holiday shopping at bricks & mortar include interacting with products directly (48%), in-store promotions (38%) and the holiday atmosphere (25%).
PwC surveyed 4,000 consumers in the US between June 26 and July 9. Respondents in the online survey were broadly representative of the US population across gender, region or state and generational group, with 1,000 respondents each from Gen Z, millennials, Gen X and baby boomers.
