If you’ve been to the mall recently and heard Mariah Carey’s “All I Want for Christmas is You” on the speakers, then you already know the 2025 holiday season is upon us.
This holiday season feels a little different, marked by a just-ended government shutdown, inflation, and signs of rising unemployment.
However, U.S. consumers at certain income levels appear to be resilient, ready to spend on holiday gifts like they have in less uncertain times, according to a new poll from Gallup.
Gallup’s initial measurement of U.S. holiday spending in 2025 shows that customers are expecting to spend an average of $1,007 on gifts this season. That is about in line with the historically elevated $1,014 that was predicted at this time last year, and up from $923 in 2023.
About a third of consumers (31%) expect to spend up to $499, while 18% said they will spend between $500 and $999, and 37% predict spending $1,000 or more.
About 8% of respondents said they’ll be Grinches this year, spending nothing, while 5% said they are unsure what they’ll spend.
As usual, the majority (56%) of those polled expect to spend about the same as they did the prior year, though this is slightly less than the average of 60% since 2006.
At the same time, the 19% who say they’ll spend slightly more this year is above the long-term average of 14%. The 23% who say they’ll spend less is on par with the long-term average.
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Major discrepancies between low-income, high-income holiday shoppers
Fiscal excitement about the holiday season seems to divide along economic lines, according to Gallup.
Although the overall spending estimate remains around $1,000, as it did last year, American households earning less than $50,000 are expected to spend $651 on holiday gifts, a significant decline from the $776 they expected to spend during last year’s season.
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Only 18% of lower-income consumers say they will spend more, down from 28% last year. In 2025, half now say they’ll spend about the same, a 10% increase from a year ago. About 30% anticipate spending less, a similar proportion to the 28% reported a year ago.
At the same time, households earning $100,000 or more predict spending $1,479, up from $1,403 last year.
Middle-income earners expect to spend $847, which is lower than the $902 expected in 2023.
U.S. shoppers have to battle inflation this holiday season
While inflation has declined from its pandemic-fueled high during the Biden administration, it remains a problem for U.S. consumers.
“You can say prices aren’t going up as much, but that doesn’t mean that people aren’t feeling those higher prices from the inflation we had two or three years ago,” Federal Reserve Chair Jerome Powell said last week.
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U.S. inflation rate by month
- January: 3%
- February: 2.8%
- March: 2.4%
- April: 2.3% (Liberation Day April 2)
- May: 2.4%
- June: 2.7%
- July: 2.7%
- August: 2.9%
- September: 3%
The Consumer Price Index (CPI) rose 0.3% in September, following a 0.4% increase in August. On average, consumer prices for all goods were 3% higher than they had been the previous year.
Gasoline was 4.1% higher and energy was 1.5% more expensive.
While the CPI report doesn’t mention tariffs once, analysts at Bank of America see import duties as playing a significant role in inflationary prices.
To make matters worse, BofA says the core goods Personal Consumption Expenditures (PCE) price index will have risen by 1.3% over the past year and 2.2% annualized since March, when the tariffs went into effect.
Last September, the PCE price index declined 0.3% year over year.
“The increase has been mostly driven by supply-side factors, providing further evidence of tariffs being the culprit,” Bank of America’s note said.
To make matters worse, tariffs have not been fully passed through yet, so BofA expects tariff-related inflation to persist in the company months for two reason.
“First, companies will continue to shift more of the tariff burden to consumers to protect margins, especially if the economy continues to outperform expectations. Second, the effective tariff rate is likely to rise further, as the full effect of the measures announced by the administration in recent months sets in,” Bank of America says.
The holiday season will come with job cuts this year
Employers used to refrain from cutting jobs during the holiday quarter. Between 2003 and 2013, the fourth quarter averaged 74,733 job cuts a month. In the next decade, the monthly average in the fourth quarter fell to about 43,000. For October, the average job cut total from 2014 to 2024 was 47,000.
According to Challenger, Gray, & Christmas, “Over the last decade, companies have shied away from announcing layoffs in the fourth quarter, so it’s surprising to see so many in October. With the onset of social media, and the ability for workers to share their negative experiences with their employers, the trend of announcing layoffs before the holidays fell away, a practice that seemed particularly cruel.”
October job cuts by industry (September)
- Technology: 33,281 (5,639)
- Retail: 2,431 (2,577)
- Services: 1,990 (6,290)
- Warehousing: 47,878 (984)
- Consumer products: 3,409 (1,983)
Through October, employers have announced 1.1 million job cuts, a 65% year-over-year increase from the 665,000 that were cut through October last year.
Employers have already cut 44% more jobs through October than they did in all of 2024. According to Challenger, 2025 has been the worst year for job cuts since employers cut 2.3 million in 2020.
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