Gen Z cuts holiday budgets by 23% as spending expectations decline

In the United States, shoppers have reported a change in their holiday spending plans for the upcoming season, reflecting economic pressures. According to PwC's 2025 Holiday Outlook report released on September 3, 2025, this year marks the first time since 2020 that overall average consumer spending is expected to decline, dropping by 5%. A significant trend noted is among consumers aged 17 to 28, commonly referred to as Gen Z, who indicated an intention to reduce their holiday budgets by 23%—the largest cut of any generation. This shift represents a stark contrast to 2024, where Gen Z planned a spending increase of 37%. Ali Furman, PwC's Consumer Market Industry Leader, spoke on the survey findings, indicating that Gen Z is emerging as a frugal generation influenced by economic challenges and the rising cost of living. They are more focused on getting value and transparency in costs rather than engaging heavily in holiday spending. As this demographic moves into their shopping years, their changing preferences are drawing attention from retailers. Retailers are now tasked with adapting to these shifts in consumer behavior, particularly the demand for unique offerings at accessible prices. Brands are trying to capture Gen Z's discretionary funds, which could lead to heightened competition as spending shrinks. The report highlights that food has become a resilient gift category in 2025, and purchasing gift cards is gaining popularity. Many consumers are opting for gift cards to manage their budgets effectively, signaling generosity without the burden of rising costs. Furthermore, the data suggests a shift in shopping behavior, as nearly equal percentages of consumers are now inclined to shop online and in-store, indicating a growing trend towards 'channel parity.' The survey results also show that a notable proportion of consumers—48%—are drawn to physical stores to interact directly with products, while others are motivated by promotions and the holiday atmosphere. However, traffic to retail locations does not always translate into increased sales, highlighting a disconnect that retailers need to address to ensure they meet Gen Z's evolving demands.