Title: U.S. Consumers Brace for Higher Holiday Prices Amid Economic Pessimism, Survey Reveals
As the peak holiday shopping season approaches, a new Deloitte survey reveals that most U.S. consumers hold a downbeat outlook on the economy, with many expecting higher prices and planning to tighten their budgets. This sentiment aligns with broader economic trends, as highlighted in a recent analysis of consumer behavior and inflation pressures, which underscores how households are adapting to ongoing financial challenges.
Economic Outlook Hits Record Low
According to Deloitte’s annual survey, 57% of respondents expect the economy to weaken in the coming year, marking the most negative outlook since the firm began tracking this data in 1997. This compares to just 30% who anticipated a weaker economy ahead of the previous year’s holiday season and 54% during the Great Recession in 2008. The findings suggest a significant shift in consumer confidence, driven by persistent inflation and economic uncertainty.
Rising Prices Fuel Consumer Concerns
Seventy-seven percent of those surveyed anticipate higher prices on holiday items, up from 69% last year. This increase comes amid the first holiday season following President Donald Trump’s latest wave of tariff hikes on many imports, adding to cost pressures on everyday goods. Brian McCarthy, retail strategy leader for Deloitte, noted that while consumers have shown resilience in spending until now, this outlook indicates that “we’re getting towards the end of that resilience.”
Planned Spending Declines Across Generations
Consumers plan to spend an average of $1,595 this holiday season, a 10% decrease from the $1,778 they intended to spend a year ago. This reduction spans all household income groups but is particularly pronounced among younger shoppers:
- Gen Z (ages 18-28) plan to spend 34% less than last year.
- Millennials (ages 29-44) expect to spend 13% less.
- Gen X anticipates a slight increase of 3%, while Baby Boomers plan to spend 6% less.
McCarthy attributed Gen Z’s tighter budgets to career instability and limited savings, while Mike Daher, U.S. consumer industry leader for Deloitte, pointed to inflationary pressures on housing and groceries as key factors.
Retailers Face a Cautious Holiday Season
The survey results add a note of caution for retailers and brands during the most crucial sales period of the year. Other forecasts, such as those from Bain & Co. and Adobe Analytics, also predict slower growth in holiday spending. Bain expects a 4% year-over-year increase in holiday sales across stores and online, below the 10-year average of 5.2%, while Adobe projects a 5.3% rise in online spending, down from 8.7% last year. These trends reflect a broader pullback in consumer expenditure, as seen in technology and software markets where budget constraints influence purchasing decisions.
Value-Seeking Behavior on the Rise
One dominant theme this holiday season is value-seeking, with Deloitte reporting a notable uptick in deal-seeking behaviors. Across income groups, 70% of respondents engage in three or more cost-saving actions, such as purchasing store brands, cooking at home, or buying used items. This shift is reminiscent of strategies seen in global trade and supply chain adjustments, where economic pressures drive efficiency and alternative sourcing.
Spending Cuts Focus on Non-Gift Expenses
Consumers told Deloitte they plan to reduce spending on holiday extras, with non-gift expenses—such as hosting, clothing, and decor—expected to drop by 22% on average. In contrast, gift spending remains relatively stable, with respondents planning to buy eight gifts compared to nine last year and spend $536 versus $505 previously. This prioritization of gifting over other holiday costs highlights the enduring importance of festive traditions, even as budgets tighten.
Industry Responses and Future Projections
Consulting firm PwC’s survey corroborates Deloitte’s findings, showing Gen Z consumers plan to spend 23% less than a year ago, with overall holiday expenditure down 5%. The National Retail Federation is set to release its holiday forecast in early November, providing further insights into industry expectations. As consumer electronics and gaming markets also navigate shifting demand, retailers may need to emphasize promotions and value propositions to attract cautious shoppers.
In summary, this holiday season is shaping up to be one defined by economic caution and strategic spending, with consumers across generations adjusting their plans in response to higher prices and a weaker economic outlook.
