The National Retail Federation’s annual Prosper Insights & Analytics survey shows that total Halloween spending is forecasted to drop by 5% to $11.6 billion this year, down from last year’s record $12.2 billion. With inflation still elevated and interest rates sky-high, low- to mid-tier consumers are expected to cut back on seasonal splurges this fall.

The survey asked nearly 8,000 consumers about their Halloween shopping plans in the first week of September. Respondents, on average, said they planned to spend around $103.63, about $4.62 less than last year’s record of $108.24. This means some households (working-poor ones) are reducing purchases of costumes, decorations, and party supplies. 

Additional color on NRF’s survey:

Seventy-two percent of consumers plan to celebrate Halloween this year, consistent with last year’s record of 73%. Top holiday activities include handing out candy (67%), decorating their home or yard (52%), dressing up in costume (49%), carving a pumpkin (43%) and throwing or attending a party (29%).

Slight decline in participation compared with last year. 

“Halloween marks the official transition to the fall season for many Americans, and consumers are eager to get a jump start on purchasing new seasonal décor and other autumnal items,” NRF Vice President of Industry and Consumer Insights Katherine Cullen wrote in a statement, adding, “Retailers are prepared to meet this early demand by offering shoppers all the holiday essentials to make this year’s celebrations memorable.”

Bloomberg noted that NRF’s dismal outlook for the Halloween spending season is yet another “blow for heavily indebted retailers,” adding to the continued pressure on spending slowdowns from low—to mid-tier consumers. 

More from Bloomberg:

“2024 has been a perfect storm for retailers of all stripes,” said Erica Weisgerber, a partner at law firm Debevoise & Plimpton LLP. “Inflation, high operational costs, and reduced consumer spending have been especially challenging for brick-and-mortar retailers, and online retailers have struggled with steep competition from e-commerce giants like Amazon.”

Many of the troubled firms, including Michaels and At Home Group Inc., are owned by private equity managers after buyouts during the pandemic proved ill-timed when interest rates rose and inflation crimped household budgets. Home, clothing and hobby retailers dominate the list of distressed retailers because the size of their debt means they lack the liquidity to compete with better capitalized competitors, according to Moody’s Ratings.

The bigger picture is that the dismal Halloween spending outlook may indicate a continued souring consumer environment that worsens from here. And this could be a bellwether for the big holiday spending season, which kicks off on Black Friday and Cyber Monday in late November.