Business News | US Consumers Wary of Economy but Plan Steady Holiday Spending: McKinsey
Get latest articles and stories on Business at LatestLY. US consumers remain wary of the economy and are cutting back on discretionary purchases, but holiday spending is expected to remain broadly steady, with nearly half of consumers planning to spend the same amount as last year, according to a latest report by McKinsey & Company.
Washington [US], August 28 (ANI): US consumers remain wary of the economy and are cutting back on discretionary purchases, but holiday spending is expected to remain broadly steady, with nearly half of consumers planning to spend the same amount as last year, according to a latest report by McKinsey & Company.
The latest ConsumerWise research found that 47 per cent of respondents expected to spend about the same during the 2026 holiday season, while 23 per cent planned to spend more and 21 per cent expected to spend less. Another 9 per cent had not yet decided.
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The findings come as consumer sentiment remains cautious. In the third quarter of 2026, 41 per cent of US consumers reported mixed feelings about the economy, while 34 per cent were optimistic and 25 per cent remained pessimistic. Rising prices and inflation remained the biggest concerns, cited by 53 per cent of respondents.
Despite this caution, spending intentions for essential categories remained broadly stable over the next three months. Gasoline was an exception, with consumers showing a stronger intention to cut spending following renewed volatility in fuel prices.
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Discretionary spending is likely to remain more selective. McKinsey said consumers reported plans to pull back across a broad range of discretionary categories, with net spending intent lowest for home decor, followed by accessories and furniture. Apparel also saw a significant seasonal pullback compared with the previous quarter.
The report said retailers and consumer businesses therefore face an environment where shoppers are still spending, but are becoming more selective about where they spend. Retailers may need to focus on value and relevance as consumers manage tighter budgets.
Holiday shopping is also beginning earlier, with 45 per cent of respondents saying they expected to start shopping by the end of October. The report said retailers should ramp up inventory, staffing and promotions ahead of the key holiday period, while tailoring strategies across generations.
Another emerging shift is the growing role of artificial intelligence in shopping. Forty-six per cent of consumers said they would probably or definitely use AI tools for holiday shopping. Among those planning to use AI, the leading uses included comparing products or prices, finding deals and getting gift ideas.
McKinsey said companies should ensure their products and prices are easy for AI tools to understand and should position themselves for AI-assisted purchase decisions. As consumers become more selective, the report said retailers will need to combine value, relevance and a strong presence across increasingly AI-driven shopping journeys. (ANI)
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