The $13 Billion Paradox: Why Americans Are Spending More but Feeling Worse
Record Halloween Spending Hides Deepening Financial Strain as the Holidays Approach
Americans just pulled off one of the priciest Halloweens ever—shelling out a record-breaking $13.1 billion, up from $11.6 billion last year. Yet, across the country, many homeowners noticed quieter streets and fewer trick-or-treaters. That contradiction says a lot about how people are spending these days—and it’s reshaping the retail landscape heading into the holidays. Analysts call it a “high floor, low leverage” environment, meaning spending stays high, but profits are harder to grow.
The Hollowed-Out Halloween
The National Retail Federation says 73% of Americans celebrated Halloween this year, with the average person spending $114.45—including a whopping $4.2 billion on decorations alone. But step outside the spreadsheets, and the story changes. Neighborhood chat groups across the U.S. reported 20–30% fewer trick-or-treaters, as families swapped front-door candy routes for “trunk-or-treat” events at schools, churches, and community centers.
What’s really happening? Households are cutting back in subtle ways. They’re still honoring traditions—because who wants to skip Halloween?—but they’re doing it differently. Instead of decorating their porches, many people bought candy at big-box stores and went to community gatherings. The spending shows up in national statistics but not in local streets. It’s a win for retail giants and a gut punch for small, local shops.
Tariffs are adding more pressure. The NRF found that 79% of shoppers expected higher prices this year because of import duties, with new tariffs driving up decoration costs by 5–15%. According to Yale’s Budget Lab, those tariffs cost the average household about $1,300 a year, and consumers end up paying roughly 70% of that bill directly.
The Squeeze Beneath the Surface
Underneath those record numbers lies a clear sign of financial strain. The Conference Board’s October confidence index dropped to 94.6, its lowest point in six months. Expectations plunged to 71.5, as Americans worried about inflation and job security. Deloitte’s holiday survey echoed that concern—average planned spending fell 10% from last year to $1,595, with 77% expecting higher prices.
People aren’t buying less; they’re buying smarter. They’re keeping the same number of gifts—eight this year versus nine last year—but opting for cheaper brands and smaller luxuries. That’s bad news for retailers relying on fat margins. Even though inflation’s cooled, 60% of consumers still feel uneasy about prices, a kind of “inflation hangover” that hasn’t worn off since 2022.
The pinch is hardest on middle- and lower-income families. With unemployment creeping up to 4.3% and job growth slowing, many are leaning on “buy now, pay later” plans instead of trimming their gift lists. Adobe expects those BNPL transactions to surge by another $2 billion this holiday season.
The Promotion-Powered Holiday Season
Adobe Analytics forecasts total online holiday sales of $253.4 billion, a new record but only 5.3% higher than last year’s 8.7% growth. What’s striking is how concentrated the spending’s become—17% of all holiday purchases are expected to land within just five days around Black Friday and Cyber Monday.
In those few days, ten separate dates will top $5 billion in sales, with Cyber Monday alone hitting $14.2 billion. More than half of that—56%—will come from mobile shoppers. And AI-driven shopping tools are up an eye-popping 520% this year.
The message from shoppers is crystal clear: They’ll spend—but only on their terms. They want steep discounts, short windows, and flexible payment options. Reuters reports that consumers now expect about 28% off during major sales, far deeper than in past years. That demand for heavy discounts cuts directly into retailers’ profits.
Winners and Losers in the Market
This holiday economy will separate the strong from the struggling.
Winners: Big e-commerce and omnichannel retailers—those with powerful advertising platforms—are sitting pretty. When nearly one-fifth of all holiday spending happens in five days, the ability to monetize web traffic and sponsored placements becomes gold. High-margin ad revenue can offset markdowns. You can already see the split: Walmart and Macy’s raised their forecasts, while Target and Best Buy played it safe.
Gainers: Value retailers and discount clubs are also in a sweet spot. Consumers still want to give gifts—they just don’t want to overpay. That mindset plays right into the hands of off-price stores that thrive on bargains without slashing margins across the board.
Losers: Seasonal and niche retailers, however, are in for a tough ride. When everyone’s offering deals, standing out gets expensive. Businesses dependent on imported goods—like home décor, furniture, or electronics—are feeling the tariff sting the hardest. Adobe’s data shows these categories are especially vulnerable.
Payment providers linked to big, healthy marketplaces will likely benefit from transaction growth. Smaller lenders, on the other hand, risk rising defaults as stretched households juggle deferred payments.
Investors should take note. Models need adjusting: cut full-price sales expectations for December by up to 1%, boost promotional cost estimates, and account for tariffs eating into margins. And don’t forget the hangover—January typically brings a spending slump as BNPL bills come due.
Signs to Watch
As the year wraps up, a few indicators will tell us how fragile this spending really is. If the Conference Board’s confidence index dips below 70 in November, more cutbacks are coming. If Adobe’s trackers show weak daily sales outside of major events, that means shoppers are running out of gas. And if discounts creep past 28%, retailers will need to start trimming profit forecasts fast.
In truth, there’s no paradox here. Halloween’s record spending alongside emptier streets is the new face of the American consumer—still buying, still celebrating, but on tighter terms. Spending hasn’t disappeared. It’s just been redefined.
NOT INVESTMENT ADVICE