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Key takeaways
- Americans plan to spend an average of $2,800 this holiday season, an increase of more than $1,000 over last year.
- Persistent higher tariffs and prices are prompting 62% of shoppers to change the way they shop.
- However, retail sales are expected to exceed $1 trillion this holiday season, indicating strong consumer demand, even amid cost pressures.
The holidays come after a bumpy year for the US economy, and Americans still expect to spend more this year than they did in 2024.
Shoppers expect to spend $2,800, on average, this holiday season, more than $1,000 more than last year, according to a BMO survey of 2,500 people. Of all generations, millennials expect to spend the most, about $4,400. Meanwhile, baby boomers are expected to spend the least — $1,600.
While inflation has declined from its last peak in the summer of 2022, high prices are still impacting consumers. As of September, prices were up 3% year over year, partly due to tariffs imposed by the Trump administration on imported goods.
Accordingly, more than three in five (62%) of BMO survey respondents said they are changing the way they shop due to tariff-related price uncertainty.
What does this mean for you?
Shoppers may find that their dollars don’t stretch as far this year, even if they spend more, thanks to tariffs and inflation. Smart shopping — comparing deals, planning early, and monitoring sales — will be key to keeping budgets on track this holiday season.
To make shopping more affordable, participants said they planned to use strategies such as shopping on sale and clearance, buying cheaper gifts, and choosing affordable brands.
For sales-conscious consumers, Black Friday, in particular, can be a blessing. A report from the National Retail Federation (NRF), a trade association for retailers, predicts that a record number of consumers will be shopping this coming Thanksgiving weekend.
“Holidays are an important part of many consumers’ budgets, and this trend is especially true this season,” said Katherine Cullen, NRF’s vice president of industry and consumer insights.
Although consumers report feeling pressured by rising prices, holiday spending is still expected to rise this year. The NRF estimates that retail sales in November and December will exceed $1 trillion, up from $976.1 billion in 2024.
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