Holiday shoppers favor physical gifts over travel despite rising costs

American consumers face a disconnect between their holiday aspirations and their actual spending plans. While many wish to prioritize travel and live events, physical gifts remain the primary focus of their budgets.

New data from Visa shows that more than half of survey respondents listed travel and live events at the top of their wish lists. However, only 15% of those people plan to spend on experiences for others. In contrast, 27% intend to favor physical gifts for their recipients.

Michael Brown, Visa's principal U.S. economist, attributes this gap to higher travel costs and lower consumer sentiment. He noted that shoppers are making trade-offs between their own experiences and the goods they purchase for family and friends. Brown stated that if consumers travel more, they are likely to buy fewer physical goods. This reflects a broader context of balancing personal desires with economic realities.

Budget pressure is a key factor in this shift. Visa expects more people to celebrate the holidays closer to home than in previous years. This decision is driven by rising airfares and general inflation. Consumer prices rose 3.7% annually in September, a figure driven higher by surging energy costs. Airlines have increased ticket prices this year as fuel costs rose by billions of dollars due to the war in the Middle East.

The impact of these costs varies by income level. Only households with an income above $200,000 spent more on trips departing between November 1 and early next year compared to the same period in 2025. Most other income groups pulled back on travel spending. Brown suggested that wealthier consumers, many of whom own equities, have benefited from recent market gains. This financial positivity motivates their continued spending.

Less affluent shoppers are focusing on value. A Visa survey from October found that roughly one-third of consumers with an income below $100,000 plan to switch to lower-cost brands or stores for holiday gifts. The company projects a 4.5% year-over-year increase in holiday sales. However, much of that growth is due to inflation. Without price increases, sales are expected to rise just 1.1%, down from the 1.3% increase during the 2025 holiday season.

The survey included roughly 4,660 U.S. adults ages 18 and older. The results suggest that consumers are internalizing higher prices. Brown said that shoppers may be expecting to spend more because they have become accustomed to the current price levels. He emphasized that these numbers must be viewed through the lens of inflation and consumer psychology regarding future price trends.