Even when comparing the most recent holiday seasons, 2024 was a record-breaking time for holiday shopping. With the 2025 holiday season coming, it’s important to know where consumers stand financially in order to see if this season will be another one for the books. Let’s examine holiday spending trends below.
One invaluable metric is the Equifax Market Pulse Index, which has given a score of 61.4. This index calculates this score based on basic statistics such as consumer credit reports, debt-to-income ratio, and overall income. It also includes much larger financial trends such as the impact of student loans, wealth volatility, and especially the increasing number of delinquencies.
Holiday Spending Trends
By analyzing this index, the score of 61.4 for the average US population marked a 0.6 score decrease from just 4 years ago in 2021. This average is especially dragged down by the worsening financial state of the younger generations. According to the index, Millennials lost a score of 1.1 in the past 4 years while Gen Z lost a whopping 3.3. This is reflected in surveyed forecasts as the only generations expected to spend less this year are Millennials and Gen Z, decreasing by 1% and 23% respectively.
One of the main financial factors bogging down these youngest generations is the lack of a financial safety net. Since April of 2019, both young city families and young singles saw an increase in the number of severe delinquencies, with young city families being as much as a 10% increase. This can largely be attributed to Gen Z holding on 5% of the US’s savings account money and only 3% of its invested assets. While the proportion of dollars saved by Millennials is 23%, both generations are seeing a decrease in the amount of assets they are able to save or invest.
Gen Z Spending
However, once you look deeper into the financial status of Generation Z, there is a much more concerning holiday shopping trend for retailers. Across all Gen Z consumers over the age of 29, only 5% of them hold around 63% of the wealth. While this means that these ‘affluent’ Generation Z have a lot more investments, they also have a good majority of the assets as well. To cope with this, over 19 million Gen Z consumers have opened a credit account since just 2021. With this in mind, it is easy to see how scarce disposable income actually is for this generation.
So how exactly do consumers with low disposable income navigate the holiday season? One major method is to preplan the gift buying. It is estimated that 39% of all gift buying will happen between the 5-day gap between Thanksgiving and Cyber Monday. While slightly lower, this number is comparable to the 45% gift spending during this period in 2024. Overall, around 80% of all planned holiday gift spending is expected to occur by the end of Cyber Monday.
Buy Now, Pay Later
Another major tool for low disposable income consumers is Buy Now, Pay Later (BNPL) services. Two-thirds of parents say they would use BNPL in order to afford larger purchases such as vehicles or electronics. However, this same demographic also says that they would use it for smaller purchases such as clothing or personal accessories. Due to this flexibility, as much as 43% of consumers say BNPL influences where they get their gifts from.
Lastly, the portrayal of certain items further entices consumers. Things like family gifts are considered more non-negotiable, alongside gifts for children or gifts relating to holiday traditions. To help make up the difference, it is estimated that around 82% of consumers will cut back on essentials like groceries and put that money toward the holiday season.
Conclusion
Fortunately, it is possible for both younger and older generations alike to make the most of their money and afford the holiday season. Some companies such as Equifax offer a dedicated team of financial advisors. These advisors help you to glean insights based on your assets, liabilities, and future potential. Moreover, they are able to take a look at much larger market trends to help you preserve your wealth or enter into wealth building opportunities. This future outlook is even more pivotal for younger generations, who are struggling to keep their finances above water on the daily level. Ultimately, if you want to make sure that your money lasts longer and to better accumulate your wealth, taking advantage of a financial advisor is one of the wisest ways to go about it.
Source: Equifax
