Americans are expected to spend more than $1 trillion during the upcoming 2025 holiday shopping season. The estimate, released by the National Retail Federation (NRF), suggests the United States is heading toward its most expensive holiday period, even as shoppers face an uncertain economy, higher unemployment, and tariffs that may increase prices on many popular gift items.
Despite these challenges, NRF’s projection is driven by continuing consumer demand. However, overspending remains a concern. Shoppers often make impulse purchases for family and friends, and heightened generosity can lead to financial strain as the season progresses.
According to NRF’s holiday survey, conducted by Prosper Insights & Analytics, consumers plan to spend an average of nearly $891 on gifts, food, and seasonal purchases. This amount represents the second-highest spending level in the survey’s 23-year history.
Another forecast, the BMO Real Financial Progress Index, anticipates even larger spending totals. It estimates that Americans will spend nearly $2,800 this season on retail purchases, entertainment, and travel. This is more than $1,000 higher than spending reported in 2024. As a result, 70% of shoppers say they are establishing stricter budgets, and over 65% are adjusting their shopping habits because of tariffs.
Paul Dilda, head of U.S. consumer strategy at BMO, noted that the holiday period follows a time marked by inflation and fluctuating prices. He said shoppers are shifting their behaviors by spending more in some areas, cutting back in others, and trying to create budgets that feel manageable for the season.
At the same time, this year’s economic surveys show mixed sentiments. Nationwide’s 2025 Economic Impact Survey reports that 55% of Americans feel financially secure heading into the holidays. Still, 42% say they plan to spend less than they did last year. Thirty-eight percent will buy gifts, while 20% say they do not plan to purchase presents at all.
There are several practical ways to reduce holiday overspending and avoid carrying unnecessary debt into 2026. Some helpful approaches include:
• Create a budget and follow it closely. Identify spending limits for gifts, food, and other categories, and review your progress regularly.
• Build a complete shopping list that includes recipients, estimated costs, and purchase details to prevent impulse spending.
• Shop early to capture discounts and avoid last-minute price increases.
• Use cash or debit cards instead of credit cards, which often encourage overspending. Paying with cash can provide a clearer view of your remaining budget.
• Avoid store credit cards that offer one-time discounts but often come with high interest rates and additional fees.
• Commit to avoiding unplanned purchases and avoid shifting money from other categories to cover unnecessary items.
• Compare discounts and sales before shopping. Check online and review Black Friday, Cyber Monday, and retailer promotions to find better prices.
• Try a holiday gift exchange among family or friends. Establish a spending limit so everyone has the same expectations.
• Consider homemade gifts that may be more meaningful and cost-effective, such as photos, baked goods, or small crafts.
• Explore thrift stores, yard sales, resale platforms, and social media marketplaces for unique and affordable gift options. Vintage items may offer more character than new purchases.
• Use any unspent gift cards, store credits, or vouchers to cover gift costs at little or no additional expense.
• Review online resources such as Credit.com for additional ideas on reducing holiday spending.
These strategies offer practical ways to manage seasonal costs while still enjoying holiday traditions.
