McKinsey’s latest ConsumerWise survey showed higher optimism among shoppers polled, but the firm’s analysts questioned how long it would last. “A boost in optimism has translated into a greater willingness to spend,” the report stated. “But consumers remain cautious.”

The report’s authors also said they observed “some growing gaps among demographic groups: for example, younger consumers report significantly higher optimism than older consumers, while male and female respondents in our survey report feeling differently about the economy.”

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The report was released as retailers face an upcoming holiday shopping season that some analysts warn may be lackluster — and the reasons vary. Recent analyst reports show that inflation, while easing, remains a concern for consumers. Higher interest rates are another challenge as they impact consumer loans as well as mortgage payments. Households are also saddled with higher debt, which limits spending.

The Federal Reserve Bank of New York said in its most recent Quarterly Report on Household Debt and Credit that total household debt rose by $109 billion to reach $17.80 trillion in the second quarter while mortgage balances were up $77 billion to reach $12.52 trillion, and “auto loans increased by $10 billion to reach $1.63 trillion and credit card balances increased by $27 billion to reach $1.14 trillion.”

The McKinsey report noted that although optimism in the strength of the U.S. economy rebounded from the second quarter, “increasing to 41 percent from 33 percent,” economic volatility and concerns over the economy “may affect U.S. consumer optimism through the end of 2024.”

The survey found that, unsurprisingly, “high-income consumers were more optimistic about the economy in the third quarter than middle- and low-income consumers.” However, when examined by age, and not income, younger generational cohorts were more optimistic than their elders. “Gen Zers and Millennials across income groups report higher rates of optimism compared with Gen Xers and Baby Boomers,” the report’s authors said, adding that this trend could be “related to the long-term unemployment rate, since a higher percentage of Gen Xers are long-term unemployed, or unemployed for more than 27 weeks, than those in younger generations.”

Shoppers — especially Gen Z and Millennials — remain price sensitive. “Seventy-six percent of consumers report trading down — that is, changing the type or quantity of purchases for better value and pricing — in the third quarter, consistent with earlier in the year,” the report’s authors said, but noted that figure “rises 10 percentage points, to 86 percent, among Gen Zers and Millennials.”