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Key takeaways:
- Gift spending looks resilient, projected to dip just 2% YoY, despite historic lows in consumer confidence. For most households, the presents under the tree or by the candles aren’t going to get cut.
- Millennials are pulling back the most, with an expected decline of 10% on gift spend and 37% on travel. Now in their parenting and mortgage-paying prime, they’re still spending, just more carefully.
- AI is the new coupon clipping. Twenty-nine percent of consumers plan to use AI somewhere in their holiday shopping, up from last year, when 22% said they planned to use AI, mostly to research products, compare prices, and stay on budget.
- The digital generation is leading an analog gift revival. Sixty-four percent of consumers say they’re prioritizing screen-free gifts this year, and that number climbs to 78% among Gen Z.
- Caution and indecision show up in travel plans. Four in ten consumers plan to travel over the holidays, and 17% are still undecided. But among those with plans, a third are skipping the plane ticket and 38% are trading down to budget or midrange hotels.
According to PwC’s Holiday Outlook 2026 survey, the instinct this year is to spend carefully while continuing traditions that stand the test of time. Eight in ten consumers plan to adopt a budgeting strategy this season, and 79% say deals and discounts influence when they shop.
Even so, the headline number is reassuring: Holiday gift spending is projected to dip just 2% from last year, even as consumer confidence fell 18.5% YoY, according to the University of Michigan’s index (from 60.7 in June 2025 to 49.5 in June 2026 when the survey was fielded). On average, consumers expect to spend $708 on gifts this year. And unsurprisingly, kids keep spending high: Households with children expect to spend more ($875), compared to households without children ($635). It’s also worth noting that consumers have a track record of underestimating their own generosity. In past years, actual holiday spending has consistently landed higher than early forecasts suggested.
Travel budgets are likely to take the biggest hit this year. But the gifts under the tree and by the candles? Those, people are planning to keep—along with home-cooked meals, in-person gatherings, and a pull toward nostalgia that’s showing up across Gen Z and millennial wish lists.
For retailers, there’s real opportunity in these signs of resilience. Holiday budgets may be shrinking, but consumers are prioritizing their spending on gifts and the traditions that matter to them. Well-timed promotions, thoughtful in-store moments, and products that fit into the rituals people aren’t willing to give up can all help turn a cautious shopper into a confident one. In 2026, the holiday season is shaping up to be a time that consumers want both: the physical gift, wrapped and ribboned, and the screen-free experiences that make the season feel like the season.
Millennials plan to pull back
Navigating an expensive stage of life—mortgages, childcare, and other household expenses—millennials expect to scale back the most of any generation, cutting gift budgets by 10% YoY and travel budgets by 37% YoY. Even so, they’re likely to remain the season’s biggest spenders overall, a reflection of being in their peak earning years. Gen Z is forecasting a similar pullback: Gift spending is down 9% YoY and travel is down 29% YoY, while their total spend remains the lowest of any generation. Meanwhile, baby boomers are moving in the other direction, with more discretionary income as major expenses like mortgages and dependent costs recede.
This pullback could say as much about consumers’ financial cushion as it does about the holidays themselves. The US personal saving rate fell from 4.5% in January 2026 to 2.7% in June 2026, according to the Bureau of Economic Analysis, a sign that consumers have continued shopping even as their financial buffer has worn thin. Add in the high fuel prices in place when this survey was fielded, and the reasons for caution come into focus: Protect what matters most, like gifts and family time; trim what doesn’t, like travel and lodging. But some spending may shift among generations, especially if baby boomers help cover shared family experiences.
AI is a shopping helper, not a habit yet
Twenty-nine percent of consumers plan to use AI somewhere in their holiday shopping this year, up from 22% last year, pointing to growing adoption, but hardly a takeover. The technology is just settling into a clear role: research assistant, price comparer, and budget helper. Three-quarters of AI users lean on it to research products. Fifty-five percent use it to compare prices. A quarter use it to stay on budget. Call it the coupon-clipping of 2026.
What most people still don’t do is buy things directly through AI platforms. Sixty-four percent of consumers using AI for ideas continue to open a separate tab and go to a website to make a purchase, rather than using the link recommended by the tool. But the appetite to explore is strong across every generation: 73% of Gen Z, 70% of millennials, 65% of Gen X, and 60% of baby boomers who use AI say they turn to it to explore gift ideas they wouldn’t otherwise have considered (68% overall), rather than for something they already have in mind. And the gap between browsing and buying doesn’t seem to be dampening confidence. Seventy-five percent of AI users believe the technology will make their holiday shopping easier this year. But AI prompt competency is another story. When we asked users to share an actual prompt, more than half were still fairly basic, closer to a search engine query than a tailored ask (21% of users were novices and 32% showed developing maturity). Only 40% showed proficiency and 8% qualified as advanced.*
*Note: These levels were determined using a data maturity assessment methodology in which prompts were assessed across three criteria to attribute a score of 1-4 in each: specificity, context, and language. These three scores were totaled and an average was taken to group them into one of the four maturity tiers: novice (1.0– 1.7), developing (1.8– 2.5), proficient (2.6– 3.3), and advanced (3.4– 4.0).
Digital natives put a premium on nostalgia
Ask people what’s on their shopping list this year, and many of the answers sound pleasantly retro: board games, books, art supplies, and puzzles. Forty-one percent of those buying gifts for kids in their family are leaning into screen-free, hands-on activities, compared with 27% buying tech devices or tech-enabled entertainment and media.
Tech isn’t disappearing from the gift list. But parents who do buy it are asking sharper questions than they used to, about data privacy, parental controls, and screen-time limits. It’s part of a broader cultural conversation playing out among educators and lawmakers in addition to parents and grandparents. Among households with children buying for them, 33% say they’re influenced by whether a product has built-in parental controls or screen-time limits, and 31% care whether a product collects kids’ personal data.
A preference for giving screen-free, hands-on gifts isn’t limited to kids. Sixty-four percent of all consumers are drawn to nostalgic, screen-free gifts this year, and that proportion climbs to 78% among Gen Z. Even the top five gifts for adult family and friends—gift cards, apparel, beauty products, consumables, and accessories—skew analog. And it’s not just what’s topped with a bow: A majority (81%) of Gen Z say they’re prioritizing offline, in-person activities this year, and 63% say a shared meal matters more to them than a physical present. The most digital generation in the survey, it turns out, is also the most willing to trade a gift for an experience.
The most striking detail isn’t just what’s on the wish list. It’s who’s asking for it, and where they’re going to shop for it. Leading the return to malls, 71% of Gen Z say they enjoy browsing in person, and 61% say the décor and atmosphere make the season feel real. They report favoring the experience over a quick, practical shopping trip. Both figures run 6 to 11 percentage points above consumers overall, but physical stores remain the top purchasing channel for shoppers across generations: More than half (52%) of all consumers expect to visit stores in person to decide what to give, ahead of search engines (42%), social media (29%), and AI-powered tools (14%). The gap widens further at checkout: 60% expect to purchase gifts in-store, compared with 38% on brand/retailer websites, 9% on social media, and just 4% through AI tools.
Travel plans remain up in the air
The clearest sign of consumer caution isn’t whether people want to travel, it’s what they’re willing to pay for travel. The share of consumers planning to travel over the winter holidays is holding relatively steady at 40% in 2026 versus 44% in 2025, and 17% are still undecided. But expected travel spend per consumer has dropped, down 24% to $419 from $553 last year. In other words, the appetite to travel is there, but the budget to do it the way people used to isn’t. Likely driven at least in part by fuel prices (crude oil spiked when this survey was fielded in June 2026, pushing gas prices to some of their highest points in recent months), that trade-down shows up in the details: A third of those with travel plans are skipping the plane ticket, 38% are booking budget or midrange hotels, and 35% plan to stay with friends or family rather than pay for lodging at all.
This dynamic isn’t limited to lower-income travelers. Half of households earning $150,000 or more still plan to travel, evidence of the K-shaped economy at work. But travelers overall appear to be trading down once they arrive, favoring the midrange hotel over the four-star, or the family guest room over either. Across income levels, the instinct is the same: Take the trip, cut the cost.
AI is becoming part of that cost-cutting tool kit, too. Sixty percent of consumers who plan to travel say they’ll use AI somewhere in the booking journey—most often to research or compare hotel and flight prices (41%), get recommendations (32%), or build an itinerary (22%). It’s the travel version of the cutting that’s taking place elsewhere this season: not a wholesale shift in how people book, but more evidence that AI has become a default tool for squeezing value out of a tighter travel budget.
Wrapping it up
This holiday season, the trees will go up. The candles will be lit. The table will get set. The wrapping paper will come out. Consumers might be careful with their dollars this year, but they’re hanging on to their traditions. Gift budgets are expected to hold steady even if consumer confidence slips again. The trade-offs? People want to spend less to make their holiday plans happen. Tech gifts might give way to board games. And the digital natives, of all people, are the ones leading the return to the store.
For retailers, travel brands, and every business leader selling into this holiday season, the takeaway is to meet people where they are with well-timed promotions, thoughtful in-store moments, and a discoverable presence in the tools consumers are using—both social and agentic commerce. The brands that get that right won’t just have had a good quarter. They will have earned, and felt, a little bit of the nostalgic warmth this time of year is really about.
Holiday Outlook 2026
This season, consumers want screen-free gifts and affordable getaways
Turning insights into action
At PwC, we translate consumer signals into more resilient operations, smarter uses of AI, and stronger customer experiences
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