Americans are embarking on the 2025 holiday
season with a blend of resilience and restraint, planning to spend more even as inflation and tariffs continue to squeeze budgets,
according to consulting firm KPMG. Consumers expect to lift their holiday spending
by 4.6% from last year, but the report finds that rising prices, not stronger household finances, are the primary driver behind the increase. Much of the anticipated growth comes from higher-income
shoppers, while lower-income households plan to trim expenses. KPMG’s finding exceeds the
estimate from rival firm Deloitte, whose research shows U.S. holiday retail
sales are expected to rise between 2.9% and 3.4% this season. Inflation remains top of mind, with 80% of consumers citing it as their biggest shopping concern, and nearly the same share
expecting tariffs to push prices even higher. Overall, consumers plan to spend an average of $847, up from $810 in 2024, but households earning above $200,000 are increasing their budgets by 9%,
whereas those earning under $50,000 expect a 2% pullback. Nearly half of respondents say their income has dropped compared with last year, adding to the pressure. Shoppers are adjusting
accordingly: more than half say they are seeking out promotions, and 50% plan to buy fewer items, resulting in smaller cart sizes and a pivot toward essentials such as groceries and personal care.
Shopping On Social Media Shopping behavior continues to evolve across channels. While one-third of consumers prefer online shopping and 18% prefer in-store, nearly half say
they have no strong preference, reinforcing the importance of seamless omnichannel strategies. Value-oriented formats are gaining momentum, including dollar stores, now planned destinations for 38% of
shoppers, and outlet centers, which rank as the top holiday shopping channel overall. Meanwhile, AI and social media are reshaping discovery, with 41% using AI tools to research gifts and one in three
making purchases influenced by YouTube or Instagram.
Cash Tops Consumer Wish Lists Gift preferences this year skew practical. Cash tops the wish list for 57% of
respondents, ahead of gift cards and apparel. Yet self-spending is seeing the biggest surge: 57% of consumers plan to treat themselves, and spending in this category is up 20% to an average of $379,
far outpacing the overall growth rate in holiday budgets. KPMG’s U.S. Consumer & Retail leader, Duleep Rodrigo, said brands that help shoppers “capture small moments of joy, without
breaking the bank,” are likely to benefit in this environment. Experiences are also gaining ground, with travel budgets set to rise 10% to an average of $1,127 as consumers prioritize
gatherings, longer trips, and group travel. Thanksgiving travel is climbing as well, with 40% of respondents planning a trip, up from 36% last year. Holiday hosting costs remain steady, averaging $231
per event for the two-thirds of Americans planning to host or attend gatherings. Additional trends highlight shifting consumer habits: Dry January participation is on the rise, holiday
decorations feel more expensive to a majority of shoppers and social-commerce adoption skews heavily toward younger generations. Nearly half of Gen Z and millennials have already made purchases
through social platforms, compared with just 18% of Boomers. Overall, KPMG’s survey suggests that despite financial pressures, consumers are determined to preserve the holiday spirit,
but are doing so in more intentional, value-driven ways.