Holiday Gift Spending Falls to $880 as Inflation Squeezes Households

Americans plan to spend an average of $880 on holiday gifts this year, marking a 21% decline from the previous season's expectation of just over $1,100.

The reduction in gift budgets reflects a wider pattern of household caution. NerdWallet's latest report indicates that consumers are not only buying fewer presents but also scaling back on travel, with many opting to stay closer to home for the holidays. This shift suggests that the financial pressure is affecting the entire holiday experience, not just the shopping cart.

Kim Palmer, a personal finance expert at NerdWallet, attributes the drop to sustained inflation. She notes that rising prices across various consumer categories have left families financially strained. "The really big underlying story is that people are stressed out financially because prices have been rising across so many consumer categories, and so people are really forced to think, OK, how can I cut back while still celebrating the season," Palmer said. "And so, people are doing that by spending less overall."

To manage these tighter budgets, Palmer advises shoppers to create detailed lists early in the year and spread purchases across several months rather than concentrating spending in December. She also warns against relying heavily on buy now, pay later services. "We found that people are turning to buy now, pay later, where you can spread out payments over several months," she said. "Of course, it’s a little bit risky because it’s a form of debt and you have to pay it back eventually, so that can be difficult once January hits."

Additional guidance includes tracking items on gift lists to purchase them during sales, which often occur as the holidays approach. Palmer suggests avoiding the use of emergency savings for shopping and resisting impulse buys. The report serves as a snapshot of current consumer behavior, with the $880 average serving as the primary benchmark for this year's holiday season.