Retailers are preparing for a potentially tepid holiday shopping season, as shoppers balance the crunch of high prices and an uncertain economic future, industry leaders said.

The back-to-school shopping season often provides insight into how the holiday season could shape up, said Curtis Picard, president of the Retail Association of Maine. He cautioned, though, that it’s far from a guarantee.

In August, Maine shoppers spent about 0.2% more at general merchandise stores — those that sell things like clothing, furniture, home goods and shoes — than they did last August, as measured by taxable revenue reported to the state. While an increase, it is much smaller than the overall pace of inflation, which was 3.3% in the northeast region over that same period.

Meanwhile, spending at food stores increased about 2.2%, restaurant and lodging spending increased 3.3% and other retail — stores specializing in dry goods, gifts, books, antiques and other categories — saw a roughly 5.4% increase, according to Maine Revenue Services data.

Picard said the general merchandise data speaks to a “wider uncertainty” about the economy among retailers and their customers, as tariff-driven price increases loom and federal data suggests a weaker-than-thought job market. He pointed to a recent survey by the National Retail Federation, which found consumers plan to spend about 1.3% less on the holidays than they did last year. That figure accounts for all holiday shopping, not just gifts.

“They are anticipating a little bit of a drop,” Picard said on a Friday phone call. “We’ll be able to look back and see how it actually plays out.”

SPENDING LESS

Another recent survey, by Deloitte, found that Americans plan to spend about 10% less on holiday gifts this year than they did in 2024.

Nearly two-thirds of respondents said they would buy cheaper brands if their preferred ones are too expensive, and half were shopping at cheaper stores. Meanwhile, nearly half of respondents were opting for homemade gifts like crafts and baked goods, sidestepping retail entirely.

But that 10% decline is an average, and lower-income households are likely feeling more of a crunch — and planning for more cuts — than their wealthier peers, Woodcock and Picard both said.

“There’s a bit of bifurcation out there amongst consumers, so your higher-end consumers still are spending fairly freely and feel like the economy is good enough that they’re able to spend,” Picard said. “It’s people on the lower end of the spectrum that are starting to feel the crunch more.”

WHAT GOES?

Kelley Glidden, who teaches classes on personal finance at New Ventures Maine, said that when budgets tighten, people tend to cut out “the fun stuff” first. But what qualifies differs from household to household.

“The ‘extras’ might be a second home or a third vacation, versus taking the kids for a Happy Meal,” she said.

But when it comes to the holidays, where gift-giving can feel emotionally or traditionally significant, buyers may be more inclined to spend, she said.

“People are pretty hesitant to give up those traditions and things that are important to them. People are more likely to cut back than to cut out entirely,” Glidden said.

Laurence Kotlikoff, a Boston University professor of economics, said buyers are likely to cut out big purchases — like vacations, home renovations or new appliances — before they start scaling back on smaller things.

“Getting that doll for my granddaughter at Christmas — that’s not going to be something people readily give up,” he said on a Tuesday phone call. “Maybe rather than three presents, you give your grandkids two presents.”

MATH OR MENTALITY

While economic reports can indicate how consumers feel broadly, individual households are typically guided by a mixture of hard financial data and a more general attitude toward the economy, said Patick Woodcock, president of the Maine State Chamber of Commerce.

“It’s not only what’s in your bank account, but what’s your confidence in the future that you’ll maintain a job, that you’ll have consistent income,” Woodcock said. “If there’s a lack of confidence in the next 12 to 18 months that you’ll have that stable income, that certainly informs your holiday shopping.”

Like many, Woodcock is keeping an eye out for the Bureau of Labor Statistics’ upcoming September inflation report — originally due earlier this month but delayed nearly two weeks by the ongoing federal government shutdown. That data, which could give more insight into national and regional economic momentum, is now slated for a Friday release.

“Will we start to see an uptick in inflation at the end of this week, and does that start signaling that some of the tariffs are beginning to affect prices?” he asked.

He noted that many of the most popular holiday items, from toys to tinsel, are imported, leaving them vulnerable to tariff-driven hikes.