Gen Z could fuel steepest drop in holiday spending since 2020: study

Holiday spending is set to decline 5% from 2024 in “the first notable drop since 2020,” according to a new study from PricewaterhouseCoopers.

The outlook predicts a more chaotic holiday season in general, as rising prices and a higher cost of living disrupt the usual patterns.

“Holiday shopping typically plays out like a well-rehearsed melody — steady rhythms, familiar refrains,” the accounting firm wrote. “But this year, it feels more like jazz: improvisational and less predictable, with shifting consumer behavior, smarter spending and a younger generation leading the key change.”

The report found that Gen Z shoppers will be the biggest contributors to the decline, reducing their holiday budgets by 23%, while millennials, baby boomers, and Gen X plan to maintain or increase their spending this year.

PwC said the key takeaway for retailers is “look beyond price cuts—and to understand how life stage, values, and emotions drive spending.”

There’s one big qualification for this outlook, however. As PwC notes, the survey reflects consumer sentiment in June, when there was “more uncertainty around tariffs, which have since been delayed or paused.”

And yet the latest data shows things haven’t necessarily improved since June. The University of Michigan’s widely cited index on consumer sentiment was down 5.7% month over month and 14.3% year over year in August—though this still marks an improvement from April and May, when tariff fears were even more pronounced.

For consumers who are concerned about tariffs, their fears could translate into lower spending, as they expect to spend 10% less this year. Indeed, 90% of “tariff-concerned shoppers” plan to cut back overall, compared to 75% of everyone else.

Looking at the bigger picture, the survey found that 84% of consumers plan to pull back on spending over the next six months, on everything from dining out to big-ticket items.