MediaTalk | Season 3 | Ep. 46 - How AI, Tariffs, Inflation will Impact Holiday Spending in 2025

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Mike Reynolds: Hi, I'm Mike Reynolds, a senior reporter covering the media industry with the S&P Global Market Intelligence tech, media, and telecom news team. Welcome to "MediaTalk," a podcast hosted by S&P Global, wherein the news and research staff explore issues in the ever-evolving media landscape. The year 2025 is drawing to an end. That means Thanksgiving and the holiday season are drawing near. In between, we have Black Friday and Cyber Monday.

Today we're going to discuss the prospects and dynamics that will shape holiday spending. This year, I'm joined by Zach Ciampa from 451 Research, which is also part of S&P Global Market Intelligence. Zach is part of 451's customer experience and commerce team, which conducts annual surveys that shed light on holiday spending intent. 

How's it going, Zach? Can you tell us about the research survey?

Zach Ciampa: Great to be here! Another year down, holiday season back. Once again, thank you for having me. Yeah, we just finished our FinTech and holiday survey, and there are some really interesting trends we've seen shift over the past year. Those tiny little insights give us a view into what we can expect this season from holiday shopping. 

Reynolds: All right. That'll be great to dig into today. We appreciate it. Like Zach, we also have a return guest, Brian Scheid. Brian is a senior reporter at Market Intelligence who covers financial markets, monetary policy, and US macroeconomics. Brian, thanks for being with us again.

Brian Scheid: Mike, thanks for having me. I really appreciate it. The one thing I wanted this holiday season was to get back on MediaTalk, so I'm glad I got that crossed off the list already. I appreciate it. 

Reynolds: Okay, so I'm glad if Santa's fulfilled your wishlist anyway. We're going to start off with some broad strokes here.

Ninety-one percent of US adults are planning to celebrate Christmas, Hanukkah, or Kwanzaa, essentially the same ratio as the past few years. The National Retail Federation's Annual Consumer Survey found that consumers plan to spend $890.49 per person on average this year on holiday gifts, food, and decorations. 

That's 1.3% less than last year's $901.99. But it only trails 2024, so some good spending there. Out of the total, about $628 will go to gifts for family and friends. The remaining $262 or so will be used on seasonal items like food or candy, decorations, and greeting cards. Your initial thoughts about that, Zach?

Ciampa: Yeah, it makes sense given the very slight change. When it comes to little differences, you can probably assume that things are mostly stable. But what's been interesting about a lot of our fieldings and a lot of the surveys and the data that's coming out is these were all fielded usually a couple of months in advance, right? I'm wondering how much the story is going to hold true within the next month or two as things like tariffs, et cetera, and more macroeconomic factors start to take place. 

Reynolds: That's fair enough. Brian, how about you? Again, to that end, as Zach just set you up, how do things play into some of your research and stories you've written relative to inflation, which is going up, as I said in the Shattered Rolling Stone song?

Scheid: Yeah. The last inflation number we had was October 24th. The Bureau of Labor Statistics reported that the consumer price index, that's really the market's preferred inflation measure, increased 3% from September 2024 to September 2025. 

3%. That's really not that much. When we remember back to the holiday season of 2022, when the US economy was really trying to emerge from the pandemic, inflation at that time was close to 7%. But like you said, it's moving really in the wrong direction. CPI inflation has gone up every month since April, and it's moving upward as the Federal Reserve has started to cut interest rates, and that's something that tends to increase inflation.

So there's a whole lot of uncertainty about what impact the Trump administration's tariffs will have on prices and spending. The Fed's target for inflation is 2%, and prices are moving away from that target, but not towards it. We'll get into all the reasons why hopefully. But I'd like to point out one pretty massive complication we're looking at. 

When we talk about inflation, whether it's this consumer price index or the personal consumption expenditures (PCE), which the Fed prefers, or we're talking about core CPI or PCE, which strips out volatile energy and food prices, all these indexes, all these inflation measures, they're all produced and released by the federal government, and the government has now been shut down for more than a month.

With the government closed, there's no one producing CPI or PCE or any inflation index. Really, we have the September number because the BLS needed to update the social security calculation, but we may not get October. We may not get November. Maybe that's going to be delayed. We're not getting jobs reports, we're not getting updates on GDP, we're not getting a lot of different stuff that the government puts out. 

So that's a really big caveat here going forward when I'm talking about inflation and the effects of tariffs on inflation, right? Or really spending amidst rising inflation. Inflation numbers are months old. We just don't have a current view.

Reynolds: Okay. That's fair enough. What we've seen and what we might get here for holiday spending could be vastly different. So we'll check into that. I think, as we go back, Brian, and look at this year's tariffs, I think there's been a major increase on the food side, but in general, I think there has been a number of categories where I think that the idea was that yes, these are really going to be hurt, but we haven't seen that much. Is that fair? 

Scheid: Yeah. Yeah. No. So now that I've called all this data outdated, let me just talk about the outdated data. Okay. All right. One interesting point about the timing of this government shutdown and this indefinite pause in inflation data from the government is that economists, market strategists, and other people like me who get paid to dive into this inflation data have been trying to pinpoint for months now just when the tariffs would hit these numbers.

So far, the impact has been pretty moderate. Like you said, there's a variety of reasons for that. I'd say largely because there's so little clarity and so much confusion about these tariffs. What's in effect? What goods are being tariffed? What countries are being hit the hardest? What countries are subject to trade deals? But if we look at the September numbers, there's really not much impact. That's not to say that it won't hit, but it just hasn't hit yet. 

One economist I spoke to sees tariffs pushing up inflation by 80 basis points by early next year. Okay. That would push inflation really to the highest level since May 2023. And like I said, we saw this huge spike coming out of COVID. The thing that most people fear with these tariffs is we're not going to hit that again most likely, but we're just going in the wrong direction.

The hit to consumers from these tariffs is coming. Businesses right now are facing higher costs, but they're not really passing these higher costs entirely onto their consumers yet. Last month, economists at Goldman Sachs put out this report saying that as of August, US consumers were absorbing 37% of tariff costs. US businesses were absorbing 51%, with the rest going to foreign exporters and potential tariff evasion. 

By the end of this year—so right when this holiday season is wrapping up—these economists forecast that US consumers will take a hit of 55% of tariff costs with US businesses absorbing 22%. In August, Goldman economists had forecast US consumers would absorb 67% of tariff costs by late 2025, with US businesses absorbing 8%. Not as bad as it was once thought to be, but you're still going to have a major hit to consumers now.

Reynolds: All right, we will see again. And, I guess the proof will be in the pudding in a couple of months. All right, let's go back to the National Retail Federation survey. They said shopping will continue across different destinations online. They think will be the top holiday shopping platform with 55% planning to make purchases digitally, followed by grocery stores, department stores, and discount stores. 

Zach, what did 451's research show on this front?

Ciampa: It is definitely similar. One interesting thing we saw this year, as opposed to other years, is that it tends to rotate between in-store shopping and online shopping. But online shopping, 50% of consumers will be shopping online this year, and that includes either exclusively online or both in stores and online. 

Okay. And then, that's in contrast to a lesser percentage of folks that will be shopping in stores, either both in stores and online or exclusively in stores. Last year, more folks were shopping in stores overall, and it's interesting because we're trying to theorize what the larger freezing is. Like we just talked about, there are a lot of things happening at an economic level that will affect people.

But in addition to seeing people shop online more, we're also going to be seeing them shop more on Black Friday specifically than on Cyber Monday, which is the predominant online sales day. So the theory here is that, at least to some extent, the deals on Black Friday will likely be as good as they are on Cyber Monday, if not better. 

More folks are going to be spending their time and their money doing Black Friday activities. And like we said, a lot of that will be taking place online versus Cyber Monday, where they obviously exclusively do that online. But it's interesting to see that shift because it was not the same story last year.

And we're talking about variants. Give or take around 5%, which is a massive change. But if you think about it over the course of the past couple of years, it's the biggest change we've seen so far, longitudinally since I believe 2022. 

Reynolds: Any sense for why that's happening?

Ciampa: I would say that's typically people just looking for good deals. Right now, everybody's trying to stretch the most out of their dollars. We've talked about inflation, we've talked about the government shutdown that's affecting people's paychecks. Now you have people who are donating a lot of money because of SNAP benefits, et cetera. 

Sure. Dollars and time are super constrained. So if you can do everything in one place online where you think you'll get the better deal, it's going to save you time and money, or at least that's the hope for most folks. Okay. And that's why we're seeing the shift.

Reynolds: Yeah, because in a layman's view, my understanding is that Black Friday's been a thing for a long time. Cyber Monday, not as long, but maybe the deals are a little bit better on Monday. I don't know if that's the case. If I'm doing this, I'm Black Friday, so … 

Ciampa: Yeah, and it depends too. One of the things that we've heard over a very long period of time, this is what folks can attest to anyway, if you've been a serious Black Friday shopper in the past, is that the deals have also largely gotten worse, or at least there used to be major doorbusters when it was traditionally just regular Black Friday going to stores and shopping.

But overall, yeah, it's looking that's the general gist. 

Reynolds: Okay. All right, Brian. Shopping, spending in whatever preferred form, whether it's for pricing purposes, assortment convenience, whether you like Black Friday or Cyber Monday, all of that's all well and good if you have a job and you're making money. Can you give us your thoughts about where the job market is given the black hole that all of you guys are seeing in terms of real information?

Scheid: Yeah, so on that black hole, the last jobs report we got from the government was the August jobs report that was released on Sept. 5. We don't have the September jobs report. We don't have the October jobs report. The November report looks iffy. So that's two, three months of missing labor market data so far. 

But what we were seeing before that, the clear trend, and something we've been writing about for months, is this idea of a no-hire, no-fire jobs market. Okay? There isn't necessarily a wave of layoffs or firings or what you'd expect with a recession. But there isn't a whole lot of job creation either. So it's a great time to have a job if you have a job, but if you're looking for a job, it's a really bad time for you—historically bad.

So through the first eight months of 2025, there have been 598,000 jobs added, or on average less than 75,000 per month. This is a clear slowdown from 143,000 jobs per month on average during the first eight months of 2024. Okay? And 230,000 per month in the same period in 2023. Wow. It's a lot of numbers, but the overall theme is that the labor market is clearly slowing down. 

Now with the jobs data, the US government's jobs report is widely seen as this gold standard, but there are a lot of private sector data sources around that are showing a lot of what we have been seeing in the BLS numbers that has continued. So Indeed, that jobs site, just put out a report.

The number of job openings is down nearly 40% from the peak of March 2022, and they've fallen now to the lowest level since early 2021. If you have a job, maybe it's a good idea to keep that job. 

Reynolds: Okay. God willing. Yeah. In reading some of your stories, Brian, again, I think you've set it up there given how things have trended. I guess the criteria for what the labor market is has changed considerably. It's a much lower delta at this point.

Scheid: Yeah, exactly. And I think this is what all of your listeners want to hear about: benchmark revisions to the jobs report. But what we saw, like in the August jobs report, the BLS revised its June payroll numbers down by 27,000. 

So we had at one point a gain of 14,000 jobs, which looked pretty bad. That's not a lot of job growth. And it was revised downward to a loss for that month of 13,000. The BLS benchmark revision showed that US employers added about 850,000 jobs in the past 12 months through March 2025, and that's 911,000—close to a million—fewer jobs than previously reported over that stretch.

So this sort of leads us to cuts at the Federal Reserve. Let me just run you through some interest rate history real quick. Okay. Back in 2022, just as the pandemic was taking over the world, the Fed cut its benchmark interest rate to near zero. That was in order to make borrowing cheap, keep the economy rolling while everyone was locked inside, making sourdough bread and watching Netflix. 

But in March 2022, it started incrementally raising rates. It stopped that around July 2023. They had gone from near zero to 5.25%. So the interest rates were really high. In order to give a little spark to the economy in late 2024, it started cutting a hundred basis points over three meetings, but then it stopped because inflation persistently was not going down.

So they had to do something and held rates steady all year. In September, they cut 25 again. They cut again in October. Now another cut is expected in December, but Federal Reserve Chairman Jerome Powell said it's not guaranteed, and it's much less clear how much the Fed might cut in 2026. 

People will say a lot of it hinges on the direction of the labor market. I think it entirely depends on what's happening with the labor market. Does unemployment rise much? It's 4.3%, which is the highest since October 2021. Does unemployment go higher? Do we get any more job creation, or does this wave of layoffs people have been expecting for months start to happen?

I think the Fed is really watching what's happening in the jobs market. I think we are too. 

Reynolds: It's going to keep you busy, right? Yeah. Here's an upset, fellas. It's 2025, and we haven't talked about AI in this conversation.

Ciampa: Of course! 

Reynolds: Zach, what role will artificial intelligence play this holiday shopping season?

Ciampa: There are a lot of different ways to look at it. Obviously, AI, especially now, is integrated with pretty much everything that exists to some extent. Interestingly enough, we have a couple of different things floating about. 

The first is that people are really interested in using AI shopping assistance, such as ChatGPT, to help give them gift ideas. Things like finding deals, checking stock, answering questions they have about products, and it's about half of consumers—48% specifically—that are at least somewhat interested in using it to do that, which makes a lot of sense too.

We've seen search engines start to get eroded a little bit by the language models as people are turning to them for basically their every need. However, on the other hand, we talk a lot about content within our channel, right? User-generated content—this is content made by everyday people, right? People are looking at ratings and reviews to help them make product decisions, but they are very much polarized on the use of AI-generated content from brands. 

We've seen some interesting campaigns, so when it comes to AI-generated content in brand materials for their shopping this year, it is very split between consumers who say they would shop more with a company that uses AI-generated content in their landing pages, et cetera, social media, take your pick, versus a similar percentage that say they would absolutely switch retailers if they were using AI-generated content in their brand materials.

So it's pretty split. All in all, people are interested in using human ratings and reviews to make purchasing decisions while also doing a lot of research on platforms such as ChatGPT. And if it comes down to AI-generated content and actual brand materials, people have pretty mixed opinions. 

Reynolds: It's gratifying in a sense that people really care about the gifts they give, whether it's via AI, whether it's checking into reviews or speaking to other people about different products. I guess it's old-fashioned in a sense that yes, holiday gift-giving is a thing that human beings like to do.

Ciampa: Yeah, there's a very human element to it, and we have the actual percentages here too. A third of consumers say that they would be at least somewhat more likely to shop with a brand that uses AI-generated content, and then 43% who would be somewhat less likely to shop with them. 

So you have a pretty big difference there. That's a 10 percentage point difference, so pretty large, but there is such a human element to the holiday season and the gift-giving that it makes sense that they would want to do research in a lot of different ways, both using stuff that they learned from their peers via UGC and also sometimes the language models can come up with good recommendations that you may not think of.

Reynolds: Okay. All right. Brian, as you said, if you have a job, it'd be a good idea to keep it because we don't know what's ahead. But any sense does that consumer sentiment play into maybe holiday shopping that, hey, I have it for now, I may not have one next year, so I'm going to do the right thing and spend more on the holidays this year? 

Scheid: Yeah, I think there is definitely a sense of the overhanging concerns over the entire economy, and I think that has to do with tariffs. A lot of people are expecting a big tariff hit coming. Maybe there's not up-to-date government information on the jobs market, but there are a lot of private sources, and the overall impression that everyone is getting now is this is going to be a rough jobs market.

Inflation is going to stay high, tariffs are going to start kicking in. The recession that we all worried about coming out of the pandemic that we thought was going to really hit us hard never came, and maybe people are still bracing for that. So I think definitely that is really going to start weighing on consumer sentiment even more going forward. A lot of that, if you see something like the Fed starts pausing their rate cuts, that could have a big impact too, because now you see that all of these people expecting borrowing costs to go down, all these people expecting a fall in mortgage rates to open up the housing market again, that might not happen as soon as a lot of people thought. 

I think definitely there is a lot of concern among consumers this season.

Reynolds: All right, we're getting to the end here. And Zach, you alluded to this a moment ago. The AI-generated content and creative—I guess Coca-Cola was taken to task in some quarters last year for stepping on some of their traditional holiday ads with AI-generated creative they're doing again this year. 

Good grades, bad grades. I think 451, you guys looked into this a little bit, and it's supposed to be a thing this holiday season, right?

Ciampa: Yeah, and it's really such an interesting thing to look at because this is not a narrative; the consumer pushback that is just coming out of nowhere. If you've seen any sort of AI-generated content on social media anywhere, a lot of us see it. You'll see pushback generally. 

When Coca-Cola did the campaign last year, a lot of people were unhappy, and they doubled down this year. This year they decided to add animals into it, so folks were equally as unhappy. It's an interesting decision, and it really goes down to what you were saying earlier too, where the holidays, for so many people, is such a magical time, and there's such an interpersonal human feeling that is really unmatched any other time of year.

So the decision to double down on artificial intelligence, especially like we're saying, when you have so much of that pushback, is certainly a choice. 

Reynolds: I guess on the other side, in the worlds of advertising and PR, any reaction is a good reaction. So that's true. Brian, your reaction to this, does this matter to you at all?

Scheid: I'm not an AI expert by any stretch, so whatever I say, take it with a grain of salt. But I think one of my big pet peeves with AI and this creative AI going forward is saying, "Oh, this AI will be able to write your novels and produce your movies, and you won't even have to come up with bedtime stories for your kids anymore because AI can do it all for you." 

And I'm like, "And it'll free you up, and now you can have more time to, you know, wash the dishes, vacuum around the house." So my thing is like, why can't AI vacuum and wash my dishes, and then I can read a story to my kids and write a novel?

Ciampa: That's 100% the type of AI I am personally interested in. We started off with tiny little robot vacuums, and yet I still have to hand wash everything in my kitchen after dinner. 

Reynolds: We're going to turn to another voice here. Sarah James, Sarah's the industry editor at S&P Global for the technology, media, and telecom news team. And she's also the editor of "MediaTalk." Sarah, is AI-generated ads part of your mindset a deterrent or a boost, perhaps, to you buying products this holiday season?

Sarah James: I don't mind the concept of AI-generated ads, but I don't want to know they're AI-generated, if that makes sense. I think where Coca-Cola and Toys R Us went wrong is they were very obviously AI-generated. If somebody notices that AI was involved, then you've gone astray, I think. 

Reynolds: Okay. That's fair enough. All right, we're now to the most important questions of the day here. What's your household forecast for the 2025 holiday season? Are we talking about more money being spent in stores versus e-commerce? Let's keep Sarah going here. If things are like in my household and millions across America, the wife/mother controls the purse strings.

Sarah, what's on the holiday shopping list, and more in stores or more online? 

James: For my 6-year-old son, we are looking at a camera for him this year. We recently came back from a vacation where he was very interested in having control of my husband and my phones to take pictures of all the stuff he wanted to take pictures of, which leads to a long catalog of photos that ultimately need to be deleted.

Okay. But giving him his own camera where he can take as many photos as his little heart wants—that's the plan, and we haven't figured out where we're going to source it from. Ideally, it would be a physical storefront, but we haven't figured out exactly where we're going to buy it yet. 

Reynolds: All right, Zach, you are a big holiday spender. The National Retail Federation loves you. Yeah, right. What are your purchases going into both stores and online? Give us a sense of what you're thinking about this holiday season.

Ciampa: This year, I'd say for me, given time crunches at the end of the year at present, it is definitely going to be a big online shopping year. I've already placed some orders. Some of the things that I've been interested in getting, I'm trying to move quickly on just in case there's a little bit of scarcity. That's the biggest concern for me. 

Definitely, price is a factor, and there are some things that I'm waiting on. Black Friday deals, for example, my dad—a big Italian guy—I'm getting him a nice proper Italian meat slicer for the house. And that one I'm going to be waiting to see if anybody's slashing prices on.

But for the most part, for me, it comes down to, yeah, the convenience factor. Can they ship it? Do I have to go so far out of my way to get this set? It's not worth it at that point. And definitely going bigger on the gifts this year. While, like you were saying, things are still relatively stable, for some of us it's been a little bit challenging, so I thought I'd go bigger or go home this year, and the internet is helping me do that. 

Reynolds: All right, as for me, I have two grandchildren now. Patrick will be 19 months for his second Christmas. Orla, 10 months for her first. We've already made some small retail purchases, and there'll be more to come. My wife has purchased some holiday decor items online, and I guess I'll have to check in with her—or maybe not—to see how many more there are to come.

We will see, anyway, as was the case last year. Brian, you're going to take us home here. What's the holiday look ahead for your family? 

Scheid: Yeah, as we discussed last year, my son's birthday is two days before Christmas. Yeah. Always leads to a big pile. The kids have basically a gift hangover for days. They don't open the presents, and they often go into the next year without being opened.

Okay. I think everyone's in agreement that we're going to take a step back a little bit. My kids really like experiences a lot more lately. And unfortunately, that's not a cheaper option. It's many times a much more expensive option. They like going to NBA games, Broadway shows, and trips. 

So that stuff is big. So I think a big one we're going to do is surprise the kids. Our neighbors recently moved to Ireland, so we'll surprise them and say, "Hey, this summer we're going to go to Ireland." So that's a big one. Stuff like that.

Reynolds: If they don't know that yet, you can't let them listen to this. 

Scheid: They are big "MediaTalk" fans.

Reynolds: Oh, I'm sure they are. That concludes this episode of "MediaTalk." I want to thank our guests, Brian and Zach, for sharing their insights as to what we might see from consumer spending perspectives during this holiday season. And a shout-out to the guys as well as Sarah for talking about their holiday spending plans. 

Ciampa: Thanks, Mike. Happy holidays, and thanks for having us yet again.

Scheid: Thank you, Mike. 

Reynolds: This is Mike Reynolds, and thanks to all of you for listening. We'll catch up on the next episode of "MediaTalk. Happy Thanksgiving and holidays, everybody.