Consumers Favor Physical Gifts as Holiday Budgets Tighten

Rising prices and economic uncertainty are reshaping holiday shopping plans across the United States, with consumers increasingly favoring physical gifts over travel and experiences. Surveys released November 4 and 5, 2026, by Visa, Circana and Bank of America show shoppers are maintaining holiday traditions while tightening budgets and reconsidering when and how they spend.

Visa's survey of approximately 4,660 U.S. adults found that more than half placed travel and live events at the top of their wish lists. However, only 15% prioritized spending on experiences for others, compared with 27% who favored physical presents.

Michael Brown, Visa's principal U.S. economist, attributed the difference to rising travel expenses, weaker consumer sentiment and greater attention to value.

"There are some interesting trade-offs that we're seeing among consumers. If I'm traveling more, I'm probably going to be gifting those physical goods less, so this is really the broader context," Brown told CNBC.

Visa expects more Americans to celebrate closer to home as airfare increases and broader inflation put pressure on household finances. Consumer prices rose 3.7% annually in September, driven partly by higher energy costs.

Airfares increased more than 22% in September from a year earlier, according to the consumer price index. Airlines have faced substantially higher fuel expenses amid the war in the Middle East.

Brown said consumers still aspire to travel and enjoy experiences but must reconcile those preferences with rising costs.

"Consumers are aspirational. They want those experiences, they want to travel, they want to be out in the world. However, the economic reality is with prices rising, with economic uncertainty, they need to balance the reality of today's economic environment with those aspirations," Brown said.

Visa also found that households earning more than $200,000 were the only income group to increase spending on trips departing between November 1 and early 2027 compared with the corresponding period in 2025 and early 2026.

Brown linked stronger spending among affluent households partly to gains in equity markets, which have supported financial confidence among wealthier consumers. Meanwhile, approximately one-third of shoppers earning below $100,000 plan to switch to cheaper brands or retailers.

Visa projects holiday sales will increase 4.5% year over year. However, excluding inflation-driven price increases, the expected growth falls to 1.1%, below the 1.3% recorded during the 2025 holiday season.

Bank of America's research points to another shift in shopping behavior, with fewer consumers planning to begin their holiday purchases early. Only 38% said they had already started or intended to shop early in 2026, down from 52% in 2025.

Mary Hines Droesch, Bank of America's head of consumer and small business products and analytics, said shoppers were taking greater control of their spending schedules.

"Consumers are being more deliberate this year, from setting their own timelines to staying focused on their budgets," Droesch said.

Bank of America reported that 48% of shoppers expected to spend about the same amount as last year, while 39% planned to spend less and 12% intended to spend more. Nearly two-thirds said personal budgets, rather than social influence, determined their spending decisions.

The research also identified declining interest in digital shopping tools. Some 72% of consumers said they did not plan to use artificial intelligence tools for holiday shopping, compared with 49% in 2025. Direct purchases through social media fell to 14% from 35%.

Credit cards became the preferred payment method for 49% of holiday shoppers, up from 32% in 2025. Younger consumers continued to favor debit cards, preferred by 38% of Generation Z shoppers and 33% of millennials.

Separately, Circana's 2026 U.S. Holiday Purchase Intentions Study, released November 4, found that 57% of consumers considered current economic conditions fair or poor, while 49% planned to reduce spending because of changed or uncertain financial circumstances.

Despite those concerns, nearly three-quarters of holiday shoppers planned to adopt money-saving strategies. These included buying discounted products (30%), redeeming rewards points (19%), choosing store brands (18%) and using loyalty programs more frequently (18%).

Kiara Barrett, Circana's head of global thought leadership, said consumers were adjusting their budgets without abandoning seasonal celebrations.

"The most striking finding is the tension between economic sentiment and consumer behavior. Consumers may not feel better about the economy, but they are taking deliberate steps to manage uncertainty. They're creating flexibility in their budgets while still making room for the traditions, celebrations, and occasional treats that make the holiday season meaningful.

Consumers aren't abandoning the holidays. They're becoming much more deliberate about how they afford them," Barrett said.