A sobering reality check for Santa's sleigh this holiday season: Americans are tightening their belts and cutting back on festive spending.
According to a recent survey, a significant portion of U.S. consumers (42%) plan to spend less this year compared to 2024. This trend is not just a blip but a response to the prevailing economic uncertainty. A separate poll by Thrivent, a financial services company, confirms that Americans are indeed reining in their holiday gift-giving.
Even with inflation easing, the high costs of essentials like groceries, utilities, and rent are taking a toll. Many are prioritizing bills and savings over splurging on gifts. And here's where it gets controversial: the Trump administration's tariffs act as a regressive tax, disproportionately affecting lower-income households. They spend a larger share of their earnings on imported goods, leaving them with a heavier financial burden, according to the Senate Committee on Small Business and Entrepreneurship.
The impact on toy prices is particularly concerning. The National Retail Federation, the world's largest retail trade association, reports that nearly every dollar earned by U.S. toy producers due to tariffs ultimately comes from consumers, hitting low-income families the hardest. Toy prices could rise between 36% and 56% under certain tariff scenarios.
LendingTree, an online comparison marketplace, estimates that tariffs could cost consumers a whopping $28.6 billion this holiday season, or about $132 per shopper. Electronics would take the hardest hit, at $186 per shopper, followed by clothing/accessories ($82), while food and candy would see the smallest impact ($12).
Consumer confidence is also on the decline. Even those financially secure are worried about job stability, rising interest rates, and a weaker economy, according to The Conference Board.
Among those cutting back, nearly half (49%) expect to buy fewer gifts, 38% will opt for less expensive options, and a notable 20% say they won't buy any gifts at all. The belt-tightening extends beyond the holiday budget, with many making fewer impulse and luxury purchases, and opting for used or secondhand goods.
A separate survey found that financial concerns are indeed affecting holiday spending, with 26% of Americans spending less on gifts than last year. However, there's a silver lining: 18% are spending more, according to the survey commissioned by Rocket Mortgage and Redfin.
The National Retail Federation projects a slight decrease in holiday spending compared to last year's record-breaking figures. Americans are expected to spend about $890 per person on gifts, food, and decor this season, down from $902 per person last year. The federation notes that 70% of this spending will be allocated towards gifts.
Beyond the holidays, Americans appear pessimistic about their prospects in the new year. While 55% of survey respondents feel secure in their personal finances, many remain cautious about the near future. Around one-third (35%) believe the U.S. economy will worsen in 2026. Among those worried about a downturn, 78% cite higher inflation as a risk, and 71% express concerns about global trade tensions and tariffs.
This consumer caution is evident in major life decisions. Nearly half (48%) have delayed or canceled vacations, 46% have put off purchasing a car, 21% have postponed having a baby, 19% have delayed weddings, and 17% have deferred retirement in the past year.
Additionally, one in five Americans report being more in debt than a year ago, with increased use of credit cards, personal loans, and borrowing from retirement plans.
Kathy Bostjancic, Chief Economist at Nationwide, observes, "Even though many Americans say they feel financially stable today, the way they're behaving tells a different story." While wages have improved, job growth is weak, and inflationary pressures persist.
Despite the surface-level confidence about personal finances, the survey reveals that many consumers are bracing for a challenging 2026. Some 43% anticipate healthcare cost challenges next year, 39% with paying off debt, 34% with retirement savings, and 31% with protecting investments from market volatility.
So, as we approach the festive season, it's clear that economic concerns are weighing heavily on the minds of many Americans. How do you think this will impact the holiday spirit and consumer behavior? Are there any strategies you think people should consider to navigate these economic challenges?
.png?trim=0,0,0,0&width=1200&height=800&crop=1200:800)
