Holiday spending by U.S. consumers is set for its steepest drop since the pandemic as shoppers — particularly Gen Z — pull back amid economic uncertainty, a PricewaterhouseCoopers survey showed.

PwC, which polled about 4,000 U.S. consumers between June and July, said shoppers on average plan to spend about $1,552 per person, down 5.3% from last year. The last comparable decline was in 2020, when average spend fell 7.6% to $1,187.

About 84% of consumers expect to curb spending over the next six months, especially on apparel, big-ticket items and dining out. More than half said price increases are likely to affect their holiday decisions.

Inflation and the economic fallout from the Trump administration's trade policies have made shoppers more cautious about discretionary purchases, while major U.S. retailers face uncertain demand heading into the crucial holiday season.

Target, Best Buy and Home Depot have maintained their annual forecasts in the recent weeks. Walmart and Abercrombie & Fitch raised their outlook, while Mattel cut its forecast.

"Consumers are approaching holiday purchases more deliberately, deciding what matters most, where to scale back and what feels worth the splurge," PwC said.

Spending on gifts is expected to take the hardest hit, falling 11% to an average spending of $721 from $814 last year, according to the survey. Gen Z budgets are expected to shrink by 23%, compared to a 37% rise in 2024.

"The traffic for Gen Z in stores has been going up, because they want that experience, but they're not necessarily transacting in-store," said Kelly Pedersen, partner at PwC.

PwC added that actual purchasing behavior could still shift, noting uncertainty around tariffs has eased since July.