The holiday season brings ample opportunities for consumers to spend their cash on a variety of gifts, but with pressure building on people’s budgets from tariffs to inflation, Americans’ spending is expected to slow this year.
The National Retail Federation forecasts Americans plan to spend around $890.49 per person on holiday gifts, food and decor, which is less than last year, when U.S. shoppers spent a record $901.99 per person.
The largest piece of the holiday spending pie this year will be on gifts, with more than $627.93 expected to go toward presents, according to the National Retail Federation.
New data from Bank of America paints a so-called “Tale of Two Wallets,” finding that higher earners are expected to make more purchases than lower-income consumers, and those lower earners will look to make purchases earlier than usual.
“A lot of the drivers of that is because of the need to spread out their expenses over several months, but also with concerns about tariffs … if they don’t shop now, prices are going to go up later,” Mary Hines Droesch, head of Bank of America’s consumer and small business products and analytics, told ABC News.
As the government shutdown drags on, paired with inflation and tariffs that have weighed on many Americans, consumers are desperate for deals this season.
Additionally, Droesch said Bank of America Institute found that shoppers are increasingly using AI tools while perusing for gifts, with half of surveyed respondents saying they plan to use AI tools during their holiday shopping this year.