Middle class cuts back on holiday gift spending

Inflation is reshaping holiday spending this year, with middle-class families placing fewer items under the Christmas tree. Americans earning $40,000 to $100,000 plan to spend 20% less than last year.

Meanwhile, wealthier households expect to spend a record $1,578 on gifts, a 6% increase from 2023. 

This growing divide highlights the struggles of lower- and middle-income families, many of whom are already stretched thin by rising costs of essentials like groceries, gas and housing.

Many lower- and middle-income households have reduced holiday gift budgets due to unexpected expenses or job insecurity. 

Gallup data shows the gap between upper- and middle-income holiday spending has widened from 50% in 2020 to 80% this year.

With 1 in 3 shoppers saying inflation affects their purchases, the holiday season highlights a growing economic divide.

For many families, limited finances mean fewer gifts and a more cautious approach to spending as they focus on essentials.