It is the most tight budget season.
Holiday spending in the United States is expected to fall 5% this year, largely driven by the strong decline of 23% of generation Z, according to a survey of a leading consulting and accounting firm.
Households plan to be deliberate in their expenses during the holidays, prioritizing the value and deciding what to waste and where to climb again, says the 2025 vacation perspective of PWC, which was launched on Wednesday.
The decrease in planned expenditure underlines how economic uncertainty is affecting the feeling of the consumer that goes to the most important retail season of the year.
Gen Z’s perspective this year is an investment marked since 2024, when its projected vacation budgets increased by 37%. (Its real vacation expenditure increased by 6% more modest, according to the analysis of the PWC credit and debit card data). The new PWC survey found that 25% of the Z generation says that its financial situation is worse than last year, compared to the 17% that said the same in 2024.
Inflation, labor insecurity and new financial responsibilities are promoting gene generation to control spending, said Ali Furman, leader of the PWC consumer market industry. Many young adults are sailing through the main transitions of life in the midst of a difficult labor market for recent graduates, often without many savings. “It is a story of the age of majority for this generation”, with some purchases of initial houses and families for the first time, forcing them to budget more carefully, Furman said.
Millennials and the Xers gene maintain their vacation budgets approximately the same as last year, according to the survey. Baby Boomers are the only generation that projects an increase, with an average expenditure of 5%.
Anzhelika Parenchuk, a 23 -year -old first -year doctoral student at George Washington University, said she is approaching the holidays with a stricter budget and turning more to discount retailers as Dollar Tree and five next for gifts.
“They have the same things as other retail stores, but cheaper,” he said.
Parenchuk said he learned his lesson after spending in excess last year. Now, without income from his former work since the postgraduate school began, he said he is stricter with his budget. Inflation has forced her to buy less things, and the news about tariffs have worried that prices are even higher, he said.
The strictest vacation budgets of generation Z are also driven by spending habits that prioritize the waste of experiences while looking for affordability in other places, slowing their appetite for the luxurious Christmas purchases, Furman of PWC said.
Generation Z is reluctant to reduce concerts and events, even when ticket prices increase. A recent survey by Marketing Merge found that 86% of young adults admit to spending too much on events. “These experiences are occupying much more of their participation in the wallet,” said Furman, “so they have less money to spend on vacation than in the past.”
Adolescents and young adults, formed by an era of constant price increases, are attracted to assess and adopt the “dupe” culture, looking for cheaper alternatives to brands, which allows them to stretch their budgets. Even for high status articles, Gen Z prefers them at a reasonable price, a concept that Furman called “affordable exclusivity.” He pointed to Labubus as an excellent example of this phenomenon.
These expenditure patterns oriented to value reflect a higher trend throughout the economy. Retailers who serve consumers aware of the budget have been among the winners this last season of profits, with a general dollar, five below, TJ Maxx and Walmart better inform sales of the expected. On the other hand, companies that are addressed to middle -income buyers, such as Target, have had problems.
A recent survey conducted by the Digital Coupon Company Retailmenot also found that buyers plan to spend less this vacation season, with an average budget of 15%. The increase in prices exceeded the concerns of the respondents, and many said they would change to different brands or start buying before if the tariffs generate higher costs. Buyers are “spending with a purpose, planning in advance and saying that the right offers, but not all offers,” said Stephanie Carls, a retail information expert in retailmenot.
The pressure on consumers could be even stronger in the coming months, which is probably bad news for someone like Parenchuk, who said that the increase in prices has weighed their shopping experience.
“It is depressing,” he said, noting that what he used to cost $ 10 now feels about $ 20, and has had to buy fewer items. She said she is trying to handle stress by establishing stricter budgets.
“Get effective, and once it’s out, it’s outside,” said Parencyuk, “just strict myself for my own good.”
