Gen Z Tightens Wallets: US Holiday Spending To Fall For First Time Since Pandemic As Inflation And Tariffs Bite

U.S. holiday spending is projected to decline about 5% in 2024, the first notable drop since the pandemic, as Gen-Z shoppers cut back sharply due to inflation, tariffs, and rising living costs.

More than eight in 10 consumers said they plan to reduce spending over the next six months, with Gen Z (ages 17–28) expecting to slash holiday outlays by 23%, while millennials, Gen X, and baby boomers anticipate spending the same or more, according to a PwC survey released Wednesday.

The pullback comes as tariffs weigh more heavily on retailers and consumers. The U.S. 'de minimis' exemption, which allowed tariff-free imports under $800 for nearly 90 years, ended Friday after U.S. President Donald Trump scrapped the rule. 

Chinese e-commerce platforms Shein, Temu, and Alibaba (BABA) had already been hit when the exemption for goods from mainland China and Hong Kong ended in May. By Aug. 29, the exemption ceased worldwide, forcing price hikes and squeezing cross-border sellers.

Shein and Temu both raised prices ahead of the May deadline, with Shein's sales sliding 23% year-on-year in June and Temu's plunging 33%, before stabilizing post-rule change.

Smaller importers and online sellers on eBay (EBAY) and Etsy (ETSY) are getting squeezed by the tariff changes, while giants like Amazon (AMZN), Walmart (WMT), Prologis (PLD) and DHL stand to benefit as more products shift to domestic supply chains.

Walmart CEO Doug McMillon had already warned that costs were climbing week by week as the last of the tariff-free inventory disappeared. For shoppers, that means more attention on stretching dollars by picking products that deliver the best value,  even as worries about jobs and inflation linger.

Fresh signs of consumer anxiety came last week as the Conference Board's confidence index fell to 97.4 in August from 98.7 in July, following a weak jobs report that underscored cracks in the labor market. Expectations for business conditions slipped, and the gauge of future income edged lower.

“Notably, consumers' appraisal of current job availability declined for the eighth consecutive month,” said Stephanie Guichard, senior economist at the Conference Board.

On Stocktwits, sentiment around consumer staples ETF XLP swung sharply this year - from 'extremely bullish' in March to 'extremely bearish' by month-end, back to 'bullish' in August, and now bearish again. Meanwhile, sentiment toward consumer discretionary ETF XLY started the year 'neutral,' turned 'bullish' in April, softened mid-year, bounced in July, and now sits back at 'neutral.'

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