Will Americans trim their holiday spending? See charts
It's no shock that spending picks up around the holidays: Gifts, decorations, travel and meals can put a dent in your wallet. Some Americans are still paying off debts from last year's holiday season.
Holiday spending in November and December could rise to $989 billion, a 3.5% increase from last year, according to the National Retail Federation. Economists say a boost in consumers' confidence, increased prices and an increase in spending among middle-income households may contribute to the overall bump in holiday spending this season.
According to the NRF's latest consumer survey, Americans are expected to spend $902 per person on average on holiday gifts, food, decorations and other seasonal items.
"When it comes to the holiday season, we know there are a number of holidays and family events and things that Americans prioritize and save for all year long,'' said NRF President and CEO Matthew Shay.
Even with the overall expected increase in holiday spending, some consumers are responding to inflation and rising prices with tighter budgets. A recent WalletHub survey asked how much Americans expect to spend around the holidays and how feelings about the economy will affect their budgets.
The survey found that nearly half of Americans still have debt from last year's holiday season. That's double the percentage of Americans who were paying off lingering holiday debt in 2023.
Santa on a holiday budget
According to WalletHub's survey, 68% of respondents said Santa will be less generous this year because of inflation. And about a third of respondents said they'll spend less on holiday shopping this year compared with 2023.
Consumer prices have risen more than 20% since February 2020, the University of Minnesota Bureau of Business and Economic Research reported. Authors of a holiday shopping trends report wrote: "Low-income households, in particular, tend to experience higher inflation than high-income households. These perceptions of decreased buying power could impact shopping habits this holiday season."
A separate survey found that about two-thirds of U.S. consumers said inflation and the cost of living would influence their holiday spending. About a quarter of respondents said they may reduce spending on gifts if prices continue to rise.
Trimming costs around the holidays
Financial advisers recommend a holiday-specific budget to avoid overspending.
The first step to budgeting is figuring out how much you want to spend on things like gifts, decorations, food and travel. Using what you spent last year can be a good starting point.
If your income is lower this year, think about what you can do differently to lower costs. It’s possible you may be able to find some automatic savings if, for instance, you decide not to travel or host a smaller holiday dinner this year.
One way to cut costs on holiday decorations is finding the best deal on a Christmas tree. An analysis from Square of more than 3,000 Christmas tree sellers shows how tree prices fluctuate throughout the season. Last year, Christmas tree sales surged on Black Friday when the average tree cost about $112. Two weeks later, the average price fell to about $90.
“The cheapest time to buy a Christmas tree is right before Christmas. The best time is whichever day maximizes joy in your household,” said Square research lead Ara Kharazian.
Contributing: Jennifer Borresen and Medora Lee