The holiday season brings ample opportunities for consumers to spend their cash on a variety of gifts, but with pressure building on people's budgets from tariffs to inflation, Americans' spending is expected to slow this year.
The National Retail Federation forecasts Americans plan to spend around $890.49 per person on holiday gifts, food, and decor, which is less than last year, when U.S. shoppers spent a record $901.99, per person.
The largest piece of the holiday spending pie this year will be on gifts, with more than $627.93 expected to go toward presents, according to the National Retail Federation.
New data from Bank of America paints a so-called "Tale of Two Wallets," finding that higher earners are expected to make more purchases than lower-income consumers, and those lower earners will look to make purchases earlier than usual.
"A lot of the drivers of that is because of the need to spread out their expenses over several months, but also with concerns about tariffs ... if they don't shop now, prices are going to go up later," Mary Hines Droesch, head of Bank of America's consumer and small business products and analytics, told ABC News.
As the government shutdown drags on, paired with inflation and tariffs that have weighed on many Americans, consumers are desperate for deals this season.
"This year, they are prioritizing big box retailers and dollar stores while having less interest in outlet stores and e-commerce sites," Droesch explained.
Additionally, Droesch said Bank of America Institute found that shoppers are increasingly using AI tools while perusing for gifts, with half of surveyed respondents saying they plan to use AI tools during their holiday shopping this year.
Some retailers have already rolled out early Black Friday savings to help ease holiday wallet woes. Retailers like Nordstrom and Wayfair, presumably hoping to lure customers shopping early to spread out their holiday expenses, are offering pre-Black Friday deals on items like cookware and Christmas trees, as well as extra discounts on clearance and sale items to cut costs even further.
"The categories that continue to be most popular are electronics, clothing, retail, and, of course, a gift card is always welcome, as it enables people to give the receiver of the gift some flexibility on how they spend it," Droesch added.
Gen Z consumers are in the market for affordable, pre-owned items and dupes that don't break the bank, Droesch said.
"A product that is very, very similar in nature to a branded, more expensive item --that's a great way for you to have a more affordable holiday budget is by giving that generation the things that they are more interested in around secondhand items," Droesch said.
As everyone looks ahead to the holidays, grocery stores are also rolling out seasonal savings on Thanksgiving meal essentials to feed a crowd for less.
Click here for the best holiday meal and food deals from Target, Walmart, Aldi and more.
