• by Sarah Mahoney , Staff Writer, October 15, 2025

Deloitte’s latest holiday forecast is surprisingly bleak: Consumers in its survey plan to spend an average of $1,595 this season, a 10% drop from last year. And their outlook about the U.S. economy is the most pessimistic it’s been since 1997, with 77% expecting higher prices on holiday items and 57% braced for the economy to weaken next year.

Given the strength in the stock market, that grim outlook might seem unexpected, says Lupine Skelly, Deloitte’s retail research leader and co-author of the report. “People in the stock market may think the economy is great. But younger consumers, less likely to be invested, are especially pessimistic.” Even higher-income households, earning $100,000 or more, are cutting back.

“We had a few years when those COVID-19 stimulus checks were great equalizers, and retail sales continued to be strong,” Skelly tells Retail Insider. “But as time goes by without them and with rising concerns about tariffs, the foundation is beginning to crack.”

Spending among Gen Z shoppers is expected to decline by 34% year over year, and by 13% for millennials. Gen Z shoppers are also more worried about high prices (62% of Gen Z versus 56% of others). Only Gen X shoppers plan to spend more (up 3% year over year).

But Deloitte, which has been collecting holiday spending data for 40 years, says people are still in the mood to celebrate and plan to find plenty of ways to increase the spirit of the holidays. Skelly says today’s shoppers are increasingly savvy: They’ll search for deals (89%), trade down on brands and retailers (77%), reuse or recycle items (73%), and make their own gifts (49%). One in four will host a holiday celebration, spending an average of $252. A growing number (26%) will use loyalty points, and 70% will engage in at least three such behaviors.

While they’re cutting back on gifts—and the number of gifts has declined from nine to eight—the steepest cuts are in non-gift purchases such as hosting, clothing and décor, down 22%.

Skelly's advice for brands and retailers: Shore up loyalty efforts to help consumers find gifting benefits through those programs. And while pricing matters, remember that shoppers are looking for more than bargains—they’re looking for value.