US consumers are heading into the 2025 holiday season with a new set of priorities, reflecting both economic uncertainty and evolving shopping habits. Unlike the last several years of consistent growth, this year is expected to see a notable decline in overall holiday spending, coupled with dramatic shifts in when and how people shop.

A Shift in Holiday Budgets

For the first time since 2020, American consumers are expected to reduce their average holiday spending, with projections indicating a drop of about 5% compared to last year. This shift is primarily attributed to factors such as rising prices, new tariffs on goods, and the overall higher cost of living. While the desire for festive celebration remains strong, many are tightening their budgets and rethinking discretionary purchases.

The trend is particularly pronounced among Gen Z shoppers. Individuals aged 17 to 28 report the sharpest expected spending cuts, with some planning to reduce their holiday budgets by as much as 23%. Young adults are facing unique challenges in 2025, such as navigating a tougher job market, grappling with inflation, and dealing with lower levels of savings as they enter new phases of adulthood. Retailers, therefore, may find themselves working harder to capture Gen Z’s limited discretionary dollars.

In contrast, older generations including millennials, Gen X, and baby boomers are showing more resilience. Many in these groups intend to maintain or even increase their holiday spending this year, signaling a divide in consumer confidence along generational lines.

The Early Bird Shopper Dominates

A defining feature of 2025’s holiday shopping is the move to an earlier start. More consumers are planning their purchases in September and October, deliberately spreading their holiday budgets to avoid the typically frantic (and potentially more expensive) November and December rush. Data suggest that September and October are seeing a significant uptick in early shoppers, while December is projected to experience a drop in shopper activity. This early shopping window not only helps consumers manage finances over time but also ensures better access to high-demand products and popular deals.

This strategic approach also stems from shoppers’ desire to avoid price hikes and out-of-stock frustrations as the holidays approach. The classic image of last-minute gifting has been replaced by pragmatic, advance planners looking to maximize value and minimize stress.

Deals, Discounts, and Value Matter More

Although discounts and sales events remain a crucial part of holiday shopping, consumers are focusing less on impulse buys and more on meaningful value and intentional spending. Many shoppers now expect discounts of up to 40% in various categories, and they are prepared to act quickly when a desirable promotion surfaces. This era is about securing quality products at the right price rather than simply hunting for the steepest markdown.

Shoppers are also seeking a sense of normalcy and authenticity—choosing brands that align with their values and offer positive experiences. Retailers with compelling, trustworthy narratives and strong customer service are better positioned to attract these savvy consumers.

Digital Discovery and the Role of Social Media

Digital channels, especially social media, have taken on new significance in the holiday shopping journey. In 2025, over one-fifth of shoppers used social media platforms to buy holiday gifts—a noticeable increase from the previous year. Platforms like Instagram, TikTok, and Facebook are not only inspiring gift ideas but also facilitating direct purchases, with influencer recommendations playing a prominent role.

Shoppers are spending time researching products, comparing prices, and reading reviews online before making their buying decisions. The convenience and tailored experiences provided by digital platforms are setting new standards for what consumers expect out of holiday shopping.

Technology as a Shopping Ally

Artificial intelligence is making a mainstream impact on how consumers shop for the holidays. More than half of shoppers now enlist AI tools to discover gift ideas, track deals, and compare prices. However, adoption varies by age: younger generations are more comfortable embracing new tech, while many older shoppers still prefer more traditional research methods.

Looking Ahead: A Season of Cautious Celebration

This year’s holiday season is poised to be one of balance—between enjoying festivities and maintaining a tighter rein on finances. Most consumers still plan to celebrate major holidays like Thanksgiving, Hanukkah, and Christmas, with a significant portion budgeting $100 or more for Christmas alone. The focus is shifting from extravagant spending to thoughtful giving and meaningful experiences.

For financial planners, retailers, and everyday consumers, understanding these trends can make the difference between a stressful season and one of intentional celebration. The emerging “smart holiday shopper” is redefining what it means to celebrate—prioritizing value, planning ahead, and turning to technology and digital channels to maximize both joy and savings.