This season, Virginians plan to spend an average of $1,035, down about 5% from last year. Budgets are rebalancing, with more going toward gifts and less toward personal purchases (including apparel and electronics) and experiences.
The pullback comes even as headline economic growth looks robust. The Federal Reserve Bank of Atlanta’s GDPNow tracker estimates annualized GDP growth over the last quarter at 4.2%, up from 3.8% in the second quarter, with consumer spending accounting for nearly 70% of GDP.
However, year-over-year inflation is nearing 3%, meaning price levels are elevated. Labor‑market indicators are softening compared to 2024, encouraging caution. Tariffs on consumer goods, notably apparel and electronics, also add price friction in categories that shoppers often consider for holiday purchases. Online remains the preferred shopping channel, with most planned purchases expected to be digital.
The Institute for Policy and Opinion Research (IPOR) at Roanoke College interviewed 912 Virginians about their holiday spending plans. The survey was conducted between Nov. 9 and Nov. 14, 2025.
Holiday spending
Households are shifting how they allocate their holiday budgets. Planned spending on gifts is up 10.6%, while spending on personal, non‑gift purchases — including apparel, electronics, and home decor — is down 16.5%. Spending earmarked for experiences like dining out and entertainment also fell 19.6%. This pattern suggests that consumers are protecting the core of the season (gift giving) while trimming extras and postponing activities in response to higher prices and economic uncertainty.
Fewer households plan to spend between $100 and $500, while slightly more fall at the far ends of the range (spending of less than $100 or more than $1,000). Income plays a role here. Lower-income households are clustered in the lower spending ranges, while higher-income households are more likely to spend $1,000 or more.
Broader economy
The broader economy is sending mixed signals. On one hand, GDP growth remains robust, with the latest GDPNow estimate tracking at 4.2% for annualized quarterly growth. Consumer spending accounts for roughly 70% of total economic activity, underscoring its central role in the health of the economy.
On the other hand, inflation remains elevated at about 3% year over year and is moving in the wrong direction (up from 2.8% in the summer of 2025). At the same time, the labor market has softened over the past year, with slower hiring, particularly among young adults. These factors likely contribute to households’ more cautious approach to holiday spending, even amid strong headline growth.
In short, consumers are navigating a landscape of solid economic output but persistent price pressures and job‑market uncertainty, which helps explain why holiday budgets are tightening despite overall economic strength.
Price dynamics are impacted by trade policy. Continued and expanded tariffs are adding cost pressure to import-heavy categories of goods, such as apparel and electronics, items that are included under personal, non-gift purchases. These tariffs raise wholesale and retail prices, making discretionary spending in these categories less attractive for consumers already navigating higher overall costs.
Online shopping
Holiday shopping continues its steady migration to digital platforms. This year, 56% of purchases made by Virginians are expected to happen online, up 4 percentage points from 2024. Convenience, broader selection, and the ability to compare prices quickly make online shopping especially appealing in an environment where households are watching their budgets closely.
Retailers should anticipate strong demand for early online promotions, streamlined delivery options, and competitive pricing strategies as consumers seek value and efficiency. This ongoing shift underscores how digital channels have become the dominant mode for holiday spending, even as overall budgets tighten.
For small businesses, this trend presents both challenges and opportunities. Those with strong e-commerce capabilities can capture more holiday sales, while businesses relying heavily on in-person traffic may need to adapt quickly to maintain visibility and competitiveness.
Analysis
“Holiday spending plans reflect a balancing act between optimism and caution,” said Dr. Alice Louise Kassens, senior analyst for IPOR and dean of Roanoke College’s School of Business, Economics, and Analytics. “While the economy shows strong headline growth, households are tightening overall budgets, reallocating dollars toward gifts and away from non-essential purchases and experiences. Elevated prices and a softer labor market are shaping these decisions, alongside tariff-driven cost pressures in apparel and electronics.
“At the same time, the continued shift to online shopping, accounting for more than half of planned holiday purchases, underscores consumers’ desire for convenience and value in a season marked by uncertainty. For small businesses, this trend highlights the importance of digital presence and competitive pricing to capture holiday demand. In short, consumers are celebrating the season, but with sharper priorities and a watchful eye on costs.”
