Americans are reducing their spending on gifts this holiday season

• 42% of Americans plan to cut back on gift spending
• Spending is increasing due to tariffs and inflation
• Consumers are reducing discretionary and luxury purchases

This holiday season, many Americans plan to reduce their spending on gifts. According to data from the 2025 Economic Impact Survey, 42% of consumers intend to spend less compared to last year. Economic uncertainty, even with the decline in inflation, is forcing people to prioritize essential expenditures, such as food and rent.

Despite the overall increase in spending, lower- and middle-income families are feeling the pinch from high prices on goods. According to Bank of America data, spending among low- and middle-income groups is shrinking, while high-income earners continue to spend on luxury items.

The cost of holiday spending is rising due to tariffs imposed by the Trump administration, which affect prices on imported goods, including toys. According to LendingTree estimates, tariffs could cost consumers up to $28.6 billion this holiday season.

In addition to reducing spending on gifts, consumers are also planning to cut back on other non-essential purchases. Approximately 47% of respondents reported that they have reduced discretionary spending, while 41% have cut back on luxury purchases.

According to forecasts from the National Retail Federation, Americans are expected to spend nearly $890 per person on gifts, decorations, and other holiday-related items, which is down from $902 last year. Despite a slight optimism among economists, consumers remain cautious about their financial prospects in 2026.

Tags: USA/Economy