A Tale of Two Holidays: Decoding the Great American Spending Divide
The holiday season in America has long been painted as a time of shared abundance, festive cheer, and bustling marketplaces. It’s a period when consumer spending traditionally hits its annual peak, driving a significant portion of the retail economy. However, a closer look at the financial landscape reveals a starkly different story unfolding this year. Beneath the surface of twinkling lights and seasonal sales, a significant economic fissure is widening, creating a tale of two distinct holiday experiences. While the nation’s most affluent households are gearing up for a season of unprecedented spending, a vast majority of middle and lower-income families are bracing for a period of careful budgeting and significant cutbacks. This growing divergence is not just a fleeting trend but a profound reflection of the economic pressures, anxieties, and shifting priorities shaping the modern American consumer.
A comprehensive annual poll by commercial real estate giant JLL provides the data-driven backbone for this narrative. Their survey of over 1,000 American consumers paints a clear picture of a holiday season defined by financial caution for most, yet unrestrained by it for a select few. The findings signal a dramatic shift in consumer behavior, forcing retailers to navigate a bifurcated market where luxury and value exist in separate, non-overlapping worlds.
The Great Holiday Spending Chasm: A Data-Driven Analysis
The aggregate numbers from the JLL survey reveal a climate of fiscal restraint. On average, American shoppers are projected to spend $1,133 this holiday season. This figure represents a significant 10.2% contraction from the $1,261 spent last year, a clear indicator that widespread economic headwinds are tamping down festive exuberance. However, this average conceals the dramatic polarization occurring across different income brackets.
High-Income Households Lead a Spending Surge
For the wealthiest segment of the population, the holiday spirit is accompanied by a spirit of lavish spending. The survey reveals that respondents from households with an annual income of $150,000 or more are not just immune to the trend of cutting back—they are actively moving in the opposite direction. This demographic plans to increase their holiday budgets by a staggering 26%, pushing their average spending to nearly $2,000 per household.
This surge is fueled by a confluence of factors. High-income earners are often more insulated from the day-to-day pressures of inflation on essential goods. Their financial portfolios, which are more likely to be invested in the stock market, have benefited from recent market highs. As Naveen Jaggi, president of JLL’s retail advisory services, astutely points out, while stock market performance is a major economic indicator, “only 50% of U.S. households are actually in the market.” For the affluent half that is, a rising market translates directly into increased wealth and consumer confidence, empowering them to spend more freely on luxury goods, high-end electronics, and experiential gifts like travel and fine dining.
The Squeeze on Middle and Lower-Income Families
In stark contrast, households on the lower end of the income spectrum are facing a season of difficult choices. Americans earning less than $50,000 a year are preparing for the most drastic cutbacks, planning to slash their holiday spending by an average of 24%, bringing their total budget down to a modest $699. This is not a matter of choice but of necessity. For these families, the “constant talk of tariffs,” as Jaggi notes, and the persistent sting of inflation on groceries, gas, and housing have eroded any discretionary income that might have been allocated for holiday gifts. Their primary concern is making their dollars stretch further for everyday essentials, leaving little room for festive extras.
The American middle class, often seen as the bedrock of the consumer economy, is also feeling the pressure. Families with household incomes between $50,000 and $100,000 are planning a more moderate but still telling reduction of around 5%, bringing their spending to $1,207. While less severe than the cuts in lower-income brackets, this belt-tightening reflects a pervasive sense of economic uncertainty. Jaggi attributes this caution to a “soft job market” and a general feeling of unease about the future. Even if retailers absorb the costs of tariffs, he explains, “That doesn’t matter. There’s a bit of doubt in the [consumer’s] mind.” This doubt manifests as hesitation to spend on non-essential items, leading to a more pragmatic and less celebratory approach to the holiday shopping season.
Shifting Priorities: The Psychology Behind the New Consumer Mindset
The current economic climate is doing more than just shrinking budgets; it is fundamentally reshaping consumer priorities and values. The JLL survey highlights a significant psychological shift away from conspicuous consumption and toward more mindful, strategic spending.
The Decline of Self-Gifting and the Rise of Thoughtful Giving
One of the most revealing trends is the sharp decline in self-purchasing. Last year, nearly 40% of shoppers planned to buy accessories, including jewelry, for themselves. This year, that figure has plummeted to just 29.1%. Furthermore, the percentage of consumers who said they don’t plan to buy any gifts for themselves this holiday season jumped from 17.3% to a full 25%.
This data suggests a powerful shift in focus. With limited resources, consumers are prioritizing gifts for others—friends, family, and children—over personal indulgence. Spending on gifts for others remained largely unchanged from the previous year, indicating that the spirit of giving is alive and well, but it is being funded by sacrificing personal splurges. In its official statement, JLL characterized this as a “shift toward more thoughtful, strategic holiday spending.” The report elaborates, stating, “Consumers are no longer willing to stretch their finances for holiday excess, instead choosing to focus their limited resources on what truly brings joy during the season.” This means a greater emphasis on meaningful presents rather than a higher quantity of items, and a deliberate move away from the debt-fueled shopping sprees of the past.
Navigating a Bifurcated Retail Environment
This deep divide in consumer behavior presents a monumental challenge for the retail industry. Businesses can no longer rely on a one-size-fits-all strategy. Instead, they must cater to two fundamentally different types of shoppers.
Luxury brands and high-end retailers are well-positioned to capture the surging spending of affluent consumers. They will likely see strong sales in premium categories like designer fashion, fine jewelry, and upscale home goods. Meanwhile, discount stores, off-price retailers, and private-label brands will become battlegrounds for the loyalty of budget-conscious middle and lower-income shoppers. These retailers will need to compete fiercely on price, value, and promotions to attract customers who are meticulously comparing costs and hunting for the best deals.
Despite the immediate challenges posed by widespread consumer cutbacks, the JLL report notes a surprising undercurrent of long-term optimism within the retail sector. Jaggi, who is in constant contact with industry leaders, states, “I’ve talked to every retailer you can think about. They are bullish on the consumer in the long haul.” This forward-looking confidence suggests that while this holiday season may be fraught with challenges, retailers believe in the fundamental resilience of the American consumer and are preparing for an eventual recovery in spending. For now, however, their short-term reality is one of navigating a deeply fractured and unpredictable marketplace.
