US holiday spending set for steepest drop since pandemic: PwC survey

Bengaluru – Holiday spending by US consumers is set for its steepest drop since the Covid-19 pandemic as shoppers – particularly Gen Zers – pull back amid economic uncertainty, according to a PricewaterhouseCoopers (PwC) survey.

PwC, which polled about 4,000 US consumers between June and July, said shoppers on average plan to spend around US$1,552 (S$2,000) per person, down 5.3 per cent in 2024. The last comparable decline was in 2020, when average spending fell 7.6 per cent to US$1,187.

About 84 per cent of consumers expect to curb spending over the next six months, especially on apparel, big-ticket items and dining out. More than half said price increases are likely to affect their holiday decisions.

Inflation and the economic fall­out from the Trump administration’s trade policies have made shoppers more cautious about discretionary purchases, while major US retailers face uncertain demand heading into the crucial holiday season.

Target, Best Buy and Home Depot­ have maintained their annual forecasts in recent weeks. Walmart and Abercrombie & Fitch raised their outlook, while Mattel cut its forecast.

“Consumers are approaching holiday purchases more deliberately, deciding what matters most, where to scale back and what feels worth the splurge,” PwC said.

Spending on gifts is expected to take the hardest hit, falling 11 per cent to an average spending of US$721, from US$814 in 2024, according to the survey.

Gen Z budgets are expected to shrink by 23 per cent, compared with a 37 per cent rise in 2024.

“The traffic for Gen Z in stores has been going up because they want that experience, but they’re not necessarily transacting in-store,” said Mr Kelly Pedersen, a partner at PwC.

PwC added that actual purchasing behaviour could still shift, noting that uncertainty around tariffs has eased since ­July. REUTERS