Gen Z’s Budget Cuts Signal Tighter 2025 Holiday Spending Season

Holiday spending in the U.S. is projected to fall by 5% this year, largely driven by a significant 23% pullback from Gen Z consumers, according to a new survey from PwC. The 2025 Holiday Outlook, released this week, highlights how economic uncertainty is shaping consumer sentiment as the crucial retail season approaches.

Households are planning a more deliberate approach to their holiday purchases, prioritizing value and making strategic choices on where to splurge and where to scale back. This marks a stark reversal for Gen Z, whose projected holiday budgets surged in 2024. Factors such as inflation, job insecurity, and new financial responsibilities are prompting younger adults to rein in spending, with 25% of Gen Z reporting their financial situation is worse than last year.

While Millennials and Gen Xers are maintaining similar holiday budgets to last year, Baby Boomers are the only generation anticipating an increase, with an average spending rise of 5%. The survey also notes Gen Z’s preference for experiences over material gifts, often opting for ‘dupe’ culture and value-oriented retailers to stretch their budgets. This shift is already impacting the retail landscape, with budget-conscious stores reporting stronger sales.

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