As the peak holiday shopping season approaches, a recent Deloitte survey reveals a stark and downbeat outlook among U.S. consumers regarding the economy. Conducted among approximately 4,000 respondents, the survey indicates a notable pessimism about economic conditions, with 57% anticipating a weaker economy in the year ahead. This is a significant increase compared to just 30% expressing similar concerns last year and marks the most negative outlook recorded since Deloitte began tracking consumer sentiment in 1997.
### The Context of Economic Pessimism
The economic forecast becomes even more grim when consumers express a belief that prices will continue to rise. A substantial 77% of respondents expect higher prices for holiday items, up from 69% last year. This expectation arrives on the heels of President Trump’s recent tariff hikes on various imports, which are perceived to contribute to rising costs. Brian McCarthy, retail strategy leader at Deloitte, notes that the once resilient consumer sentiment is starting to wane, hinting at a possible end to sustained spending growth.
### Shifts in Spending Plans
This pessimistic outlook has had a tangible impact on spending intentions among consumers for the holiday season. On average, respondents plan to spend $1,595, which is a 10% decrease from the $1,778 spent in the previous year. This downturn is seen across all income groups and generations but is particularly pronounced among younger consumers.
Gen Z shoppers (ages 18-28) reported a 34% reduction in their planned spending for the holiday season compared to last year. Millennials (ages 29-44) also indicated they would spend approximately 13% less. In contrast, Gen X consumers plan to slightly increase their spending by 3%, while Baby Boomers expect to reduce their expenditures by 6%. Factors such as job market uncertainty and inflation, particularly impacting housing and everyday costs, contribute to Gen Z’s tighter budgets.
### Broader Consumer Trends and Holiday Spending
The implications of this survey extend beyond immediate spending plans. Analysts suggest that retailers and brands should prepare for a more cautious holiday season, as various forecasts indicate lower spending across the board. While some projections suggest a rise in overall holiday spending — an increase of 4% year over year, according to Bain & Co. — this is a decline from the 10-year average of 5.2% growth.
Further validation comes from Adobe Analytics, which anticipates a 5.3% increase in online holiday spending, although this is a slowdown compared to last year’s 8.7% growth. Similarly, PwC’s survey reveals that consumers expect to spend roughly 5% less overall, averaging about $1,552 on gifts, travel, and entertainment compared to the year prior.
### Shifting Consumer Behavior
Amid this economic backdrop, consumers are exhibiting pronounced “value-seeking” behaviors, looking for deals and alternatives when spending. Deloitte’s findings underscore that 70% of respondents are engaging in at least three deal-seeking behaviors. Popular strategies include opting for store brands, cooking meals at home, and purchasing second-hand goods.
Moreover, when it comes to non-gift related expenses — which include hosting, clothing, and decor — consumers indicated they will spend an average of 22% less. Interestingly, plans to purchase gifts saw a less dramatic cutback, with the average respondent planning to buy about eight gifts compared to nine last year, spending a combined total of $536 on gifts, slightly up from $505 the previous year.
### Conclusion: A Complex Landscape
As the holiday season unfolds, the overarching theme remains clear: value. Shoppers are not only concerned with their economic well-being but are also calibrating their spending behaviors to adapt to economic pressures. For retailers and brands, this signals a vital need to align marketing strategies with consumer concerns and emphasize value-driven offerings to attract budgets that are becoming increasingly constrained.
In sum, the findings from Deloitte’s annual survey paint a comprehensive picture of a cautious consumer landscape, driven by inflationary pressures and an uncertain economic outlook. Retailers would do well to heed these insights as they navigate the complexities of a challenging holiday season marked by consumer restraint and shifting priorities.
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