By: John Capone, New England Hub Office Managing Partner, KPMG U.S. and Eric Turner, Partner and Commercial Clients Audit Practice Leader, KPMG U.S.

This summer, KPMG LLP’s (KPMG) back-to-school survey highlighted how families are adjusting to rising costs and reprioritizing spending. The Massachusetts Business Roundtable’s Open Forum in September featured a discussion on how these trends are reshaping consumer behavior, workforce readiness, and the local economy.

Parents are planning ahead, focusing on essentials, and turning to promotions and online retailers to make their budgets go further. With 92% of consumers reporting higher living costs and more than half concerned about affording necessities, the survey reflects broader themes as families balance tight finances with the desire to provide enriching experiences, from extracurriculars to educational technology.

These early insights set the stage for what we’re seeing as the holiday season approaches. KPMG’s latest holiday spending survey reveals that Americans are approaching this year’s holidays with a cautious but deliberate mindset. Consumers are expected to spend an average of $847 on holiday shopping this season, up 4.6% from 2024 due to rising prices, prompting them to spend thoughtfully on what matters most.

Priorities Are Shifting: Self, Travel, and Essentials

This holiday season, many consumers are turning inward, focusing on themselves and meaningful experiences despite financial pressures. Six in ten plan to shop for themselves, with self-spending expected to rise 20% year-over-year to an average of $379. Holiday travel is expected to increase, with Americans set to spend an average of $1,127 on trips, reflecting a strong desire for meaningful experiences even amid tighter budgets.

Spending patterns reveal careful prioritization:

  • Essential categories are seeing growth: groceries (+23%), automotive (+12%), and personal care (+7%) are all on the rise.
  • Discretionary spending is more selective: toys (-15%), furniture (-12%), and hobby supplies (-9%) are declining.
  • Technology is influencing decisions: 41% of consumers use AI to research purchases, while nearly 70% are influenced by platforms like Amazon, YouTube, or Instagram when making buying choices.

This shift reflects a recalibration of priorities during the holidays. Essentials remain non-negotiable while shoppers reduce discretionary expenses, prioritizing value and personal significance. At the same time, advances in digital technology, especially AI-powered tools, are reshaping how consumers discover and decide. These technologies provide personalized recommendations, streamline comparisons, and offer real-time insights, making the shopping experience more tailored and efficient. As a result, consumers can confidently navigate options that align with their values and needs, enhancing both convenience and satisfaction in their holiday purchases.

Implications for Business

These insights highlight the importance for businesses to understand evolving consumer behavior. Families and individuals are navigating financial pressures carefully but remain willing to spend strategically. Brands that deliver value, convenience, and meaningful experiences—while paying attention to emerging trends like AI-driven shopping and social influence—can capture loyalty even in a cautious spending environment.

In Massachusetts, rising costs are reshaping both consumer choices and workforce readiness, creating unique challenges and opportunities for local businesses. Companies that adapt by offering flexible options and targeted value propositions will be better positioned to meet the evolving needs of their communities and strengthen customer relationships.

From back-to-school essentials to holiday gifts and travel, understanding where and why consumers spend is critical for businesses planning for the remainder of 2025 and into 2026. By recognizing both economic realities and emotional drivers shaping consumer behavior, organizations can align offerings to meet evolving expectations and help consumers make the most of every dollar this holiday season.

Methodology

This article draws on insights from two KPMG Consumer Pulse surveys conducted across the United States in 2025. The first survey, focused on back-to-school spending, gathered responses from 2,003 consumers between June 6 and June 13. The second survey, centered on holiday shopping trends, was conducted from August 28 to September 4 and included 2,021 participants.

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