Green garlands, giant nutcrackers, baubles and bows go up in early November on the historic downtown building that houses the gift shop. Inside, customers can choose from over 500 different types of ornaments and a variety of holiday gift baskets.

“We really just make it a magical spot,” co-owner Emily Butler said. “Whether you come in or not, we want to make sure that we’re spreading that holiday joy.”

But Butler says she and her twin sister-business partner had to work harder this year to turn browsers into buyers and to make a profit. Many of the decorations and stocking stuffers they sell are made overseas and either did not arrive or got more expensive when President Donald Trump imposed unusually high taxes on imported goods, she said.

In response, the sisters focused their selection on more profitable items like nutcrackers and gift baskets. They’ve also noticed customers cutting back, selecting a $100 gift basket over the $150 version, or buying one ornament instead of several, Butler said..

“We’re definitely seeing more cautious spending this year,” she said.

Along with the unpredictable tariffs, stubborn inflation and weak hiring have shaken consumer confidence in the U.S. economy. The vast majority of U.S. adults say they’ve noticed higher than usual prices for groceries, electricity and holiday gifts in recent months, according to a December poll from The Associated Press-NORC Center for Public Affairs Research.

A Gallup index that summarizes Americans’ assessments of current economic conditions fell to a 17-month low in November. Consumers also indicated less enthusiasm for spending money on holiday gifts; their estimated gift budgets decreased $229 between October and November, the largest drop Gallup has recorded at that point of the holiday shopping season. The survey was conducted in November, partially during the government shutdown, which might have tempered spending plans.

However, the worst-case impact on consumer prices that many economists foresaw from the Trump administration’s tariff policies hasn’t materialized. Some products have been affected more than others. Here’s a look at what has happened with supplies and prices in popular gifting categories.

Games and toys

Game and toys were particularly susceptible to tariff-related price increases since the majority of the ones sold in the U.S. are made in China, according to industry trade group The Toy Association. The tariff rate the Trump administration imposed on Chinese goods became a rollercoaster that started at an additional 10%, peaked at 145% and ended up at 47%.

The uncertainty made it hard for toy shops to decide what to order for the holidays. Dean Smith, who co-owns independent toy stores JaZams in Princeton, New Jersey, and Lahaska, Pennsylvania, said the manufacturers in China that he buys toys from did not pass on their tariff costs all at once but he has seen their prices inch higher with every reorder.

Smith estimated that wholesale prices for 80% of his inventory went up anywhere from 5% to 20%. Some shoppers who don’t buy toys regularly might be surprised by price increases he adopted in turn, Smith said. A doll that sold for $20 to $25 last year now costs $30 to $35 at JaZams, he said.

“For folks with marginal incomes, this is going to be a very difficult holiday,” Smith said.

Electronics

Consumer electronics are mostly made in China and other Asian countries. In 2023, China accounted for 78% of U.S. smartphone imports, and 79% of laptop and tablet imports, according to the Consumer Technology Association trade group.

Best Buy said in May that it was raising prices due to tariffs. But CEO Corie Barry said late last month that the consumer electronics chain made sure to stock computers, phones and other products at different price levels, a decision she credited with helping Best Buy attract more lower-income shoppers.

“The consumer is not a monolith,” Barry told reporters.

Game consoles are always a popular holiday item, and console makers made news earlier this year when they announced price increases. Sony raised the price of the PlayStation 5 by $50 to $550 in August, following Microsoft and Nintendo raising prices for their game consoles.

Jewelry

Jewelry shoppers will likely see higher prices, but that has more to do with the soaring price of gold than tariffs so far, according to David Bonaparte, president & CEO of trade group Jewelers of America.

The varying tax rates Trump set for countries that import American goods with a total value less than their exports to the U.S. affected jewelry in various ways. Watches from Switzerland, for example, were subject to a 39% tariff from July 31 until the country struck a deal with the Trump administration last month to lower the import tax rate on its products to 15%.

India, which refines many of the diamonds sold in the U.S., rushed in shipments of the gemstones before a 50% tariff on the country’s products took effect on Aug. 27. Higher prices for jewelry made with diamonds shipped from India will likely start to be felt in 2026, Bonaparte said.

“It’s really a matter of what happens after Jan. 1,” he said. “If these tariffs are still in place, then prices will probably increase.”

Holiday decor

Holiday decorations are yet another category that mostly comes from overseas, particularly China.

Jeremy Rice co-owns House, a home-décor shop in Lexington, Kentucky, that specializes in artificial flowers, wreaths and table decorations. He said the tariffs slowed down production of much of his fall stock and seasonal merchandise like ribbon. Some larger and more expensive items he didn’t order at all because they would have been too expensive to retail.

Rice raised prices on the products he did get. The popular red berry stems that House long has carried increased from $8.95 last year to $10.95 due to higher import costs, he said.

“We sell thousands of these berry stems, and every time we sold one, I flinched from knowing what it should have been, knowing that our supplier paid more for them, which made us pay more for them, which made our customer pay more for them,” Rice said.

Shopping strategically

For those looking to avoid tariff-related price increases, John Harmon, managing director of technology research at technology consulting company Coresight Resarch, recommends checking out secondhand stores and discount retailers like T.J. Maxx, Marshall’s and HomeGoods. The off-price chains buy much of their inventory from leftover stock that would have entered the U.S. before new tariffs kicked in.

Joe Adamski, senior director at procurement services company ProcureAbility, said books, food and beverages are some of the domestically produced goods that make good gifts.

The report, published Monday, found that Meta generated roughly $18 billion in advertising revenue from China in 2024, around 10% of its global revenue, even as internal documents showed that nearly one-fifth of that (about $3 billion) came from ads tied to scams, illegal gambling, pornography, and other prohibited activity. Meta internally labeled China its top “scam exporting nation,” accounting for 25% of all scam and banned-product ads globally, according to the report.

Meta’s core social media platforms (Facebook, Instagram, WhatsApp) are blocked in China, but the company still earns billions from Chinese advertisers targeting global users.

The investigation, Leathern told Fortune, illuminates several issues with both Meta and the broader Chinese ad market. “It appears that a variety of business partners that Meta has are not conducting themselves in an ethical way and or there are employees of those companies that are not doing what they’re supposed to be doing,” he said. “It’s quite telling that Meta took down its entire partner directory, which obviously means that they must be reviewing their partners, and there’s a lot of them.”

“Scams are spiking across the internet, driven by persistent criminals and sophisticated, organized crime syndicates constantly evolving their schemes to evade detection. We are focused on rooting them out by using advanced technical measures and new tools, disrupting criminal scam networks, working with industry partners and law enforcement, and raising awareness on our platforms about scam activity. And when we determine that bad actors have violated our rules prohibiting fraud and scams, we take action,” a Meta spokesperson told Fortune in a statement.  

Meta communications chief Andy Stone, however, pushed back on the investigation, posting on Threads, “Once again, Reuters is misconstruing and misrepresenting the facts.” He argued that CEO Mark Zuckerberg’s “integrity strategy pivot”—which included instructing the China ads-enforcement team to reportedly “pause” its work—was to improve teams’ goals and “instruct them to redouble efforts to fight frauds and scams globally, not just from specific markets.” 

Stone also claimed that these teams have “doubled their fraud and scam reduction goal and over the last 15 months, user reports of scam ads have declined by well over 50%.”

The revelations published by Reuters echo—but far exceed—the AI-driven deepfake scheme earlier this year involving Goldman Sachs during which scammers used AI-generated videos of investment strategist Abby Joseph Cohen to lure retail investors into fraudulent WhatsApp groups via Instagram ads.

Reuters’ reporting suggests Meta’s China-linked scam problem is not an edge case or a blind spot, but an allegedly known and lucrative segment of its advertising business.

According to internal estimates cited by Reuters, Meta served as many as 15 billion “high-risk” fraudulent ads per day, generating roughly $7 billion annually. The company required a 95% confidence threshold before banning fraudulent advertisers; those falling below it were often allowed to continue operating, sometimes at higher fees. Meta also established a 0.15% revenue “guardrail” (about $135 million) as the maximum revenue it was willing to forgo to crack down on suspicious ads, even as it earned $3.5 billion every six months from ads deemed to carry “higher legal risk.”

Internal decision-making was explicit. When enforcement staff proposed shutting down fraudulent accounts, internal documents reviewed by Reuters showed they sought assurance that growth teams would not object “given the revenue impact.” Asked whether Meta would penalize high-spending Chinese partners running scams, the answer was reportedly “No,” citing “high revenue impact.” Internal assessments reportedly noted that revenue from risky ads would “almost certainly exceed the cost of any regulatory settlement,” effectively treating fines as a cost of doing business.

In late 2024, Meta reinstated 4,000 second-tier Chinese ad agencies that had previously been suspended, unlocking $240 million in annualized revenue—roughly half of it tied to ads violating Meta’s own safety policies, according to the investigation. More than 75% of harmful ad spending, Reuters found, came from accounts benefiting from Meta’s partner protections. The company also disbanded its China-focused anti-scam team.

An external audit commissioned by Meta from the Propellerfish Group reached a blunt conclusion when investigating fraud and scams on the platform: Meta’s “own behavior and policies” were promoting systemic corruption in China’s advertising ecosystem. Reuters reported that the company largely ignored the findings and expanded operations anyway.

Leathern, who reviewed the reporting and internal figures referenced in the report, told Fortune the scale of the problem was difficult to defend. “I was disappointed that the violation rates for the China-specific advertisers were as high as they were in the last year,” he said. “It’s disappointing, because there are ways to make it lower.”

His critique goes to the heart of the failure. Platforms, he said, should hold intermediary agencies accountable for the quality of advertisers they bring in. “If you’re measuring violation rates coming from certain partners, and those rates are above a threshold every quarter or every year, you can just fire your worst-performing customers,” he said.

“I think it’s important for us to have some sense of transparency into how policies are being enforced and what companies are doing in terms of reducing scams on their platforms,” Leathern added.

Over the last 18 months, Meta has removed or rejected more than 46 million advertisements placed via so-called resellers, or large Chinese ad firms. And more than 99% of ad accounts associated with resellers found to be violating the company’s fraud policies were proactively detected and disabled. 

Aside from a need for transparency, Leathern warned that prioritizing short-term revenue over trust ultimately threatens the business itself. “If people don’t trust advertisers, advertising, it reduces the effectiveness of that channel for all advertisers,” he said. “There’s a lot of risk to their business, directly and indirectly, from not doing a good enough job on stopping scams.”

The human cost is already visible. Reuters documented victims across North America and Asia, including U.S. and Canadian investors who lost life savings to fake stock and crypto ads, Taiwanese consumers misled into buying counterfeit health products, and a Canadian Air Force recruiter whose Facebook account was hijacked to run crypto scams. Meta’s own internal safety staff estimated the company’s platforms were “involved” in roughly one-third of all successful U.S. scams, linked to more than $50 billion in consumer losses.

The problem is intensifying as generative AI lowers the barrier for scammers. “You can create something that looks plausible far more easily than ever before,” Leathern said. “The speed and adaptability of criminals and their use of AI tools just makes the environment far more tricky.”

Yet Leathern said platforms like Meta have not been sufficiently transparent about how aggressively they are using those same tools to fight abuse. “We just don’t have a ton of insight into what they’re doing to reduce scams and fraud coming in through ads,” he said.

For Leathern, the investigation should be a turning point. “I hope they see this as an opportunity to improve things for people,” he said.

A moderately cooling labor market could increase the likelihood of more rate cuts by the Federal Reserve—a tantalizing prospect for many investors eying future earnings growth—fueling bullish behaviors in the stock market, according to Morgan Stanley analysts.

“We are now firmly back in a good is bad/bad is good regime,” Michael Wilson, chief U.S. equity strategist and chief investment officer for Morgan Stanley, wrote in a note to investors on Monday.

Fed Chair Jerome Powell’s divisivecut last week, the Fed’s third cut in as many meetings, was based on consistent data showing a softening job market, including unemployment rising three months in a row through September, and the private sector shedding 32,000 jobs last month, per ADP’s November report. 

According to Powell, the quarter-point cut was defensive and a way to prevent the labor market from tumbling, adding that while inflation sits at about 2.8%, which is higher than the Fed’s preferred 2%, he said he expects inflation to peak early next year, barring no additional tariffs.

He added that monthly jobs data may have been overcounted by about 60,000 as a result of data collection errors, and that payroll gains may actually be stagnant or even negative.

“I think a world where job creation is negative…we need to watch that very carefully,” Powell said at the press conference directly following the announcement of the rate cut. 

Wilson suggested that Powell’s emphasis on the jobs data, as well as his de-emphasis on tariff-caused inflation, makes the labor market a crucial factor in monetary policy going into 2026. 

As a result of the government shutdown, the Labor Department’s job market report will be released on Tuesday, which will contain data from both October and November, and is expected to show a modest 50,000 payroll gain in November, with the unemployment rate ticking up from 4.4% to about 4.5%, consistent with the trend of a labor market that is slowing, but not suddenly bottoming out. 

‘Rolling recovery’ versus plain bad news

The Morgan Stanley strategist has previously argued that weak payroll numbers are actually a sign of a “rolling recovery,” with the economy in the early stages of an upswing slowly making its way through each sector. It follows three years of a “rolling recession” that Wilson said had kept the economy weaker than what employment and GDP figures suggested.

In Wilson’s eyes, because jobs data is a lagging metric, the trough of the labor cycle was actually back in the spring, coinciding with mass DOGE firings and “Liberation Day” tariffs. For a more accurate representation of the health of the economy, Wilson argued to look instead at the markets. The S&P 500, for example, is up nearly 13% over the last six months.

However, with Powell basing his policy decisions on data such as jobs, Wilson noted, the Fed could still see more room to cut, even as Morgan Stanley sees a labor market that is not in jeopardy.

“In real time, the data has not been weak enough to justify cutting more,” Wilson told CNBC last week prior to the Fed meeting. “But when they actually look at the revisions now…it’s very clear that we had a significant labor cycle, and we’ve come out of it, which is very good.”

But just as economists weren’t in consensus for the FOMC’s most recent rate cut, the possibility of more meager jobs numbers is not universally favored.

Claudia Sahm, chief economist at New Century Advisors and a former Fed economist, agreed the job data is a lagging economic indicator, but warned it could indicate a recession is underway, not that we’re already in the clear. What was particularly concerning to her was that lagging labor data could bear worse job news, as layoffs have yet to surge following shrinking job openings. 

She told Fortune ahead of the Fed’s decision last week that additional rate cuts would not be welcome news, but rather a sign the Fed had acted too late in trying to correct a battered labor market.

“If the Powell Fed ends up doing a lot more cuts, then we probably don’t have a good economy,” she said. “Be careful what you wish for.”