Terry DavidAmerican consumers are defying weak sentiment readings to deliver a strong 2025 holiday shopping season, with total retail sales expected to exceed $1 trillion for the first time in history. The National Retail Federation forecasts November and December spending to grow between 3.7 and 4.2 percent over 2024, even as surveys show consumers expressing concern about prices and the economic outlook. The disconnect between what shoppers say and what they actually spend is defining this year’s retail landscape.
How Much Are Americans Spending This Holiday Season?
The National Retail Federation projects total holiday spending between $1.01 trillion and $1.02 trillion, up from $976.1 billion in 2024. This would mark the first time holiday retail sales have crossed the trillion-dollar threshold.
Visa Business and Economic Insights forecasts a 4.6 percent year-over-year increase in total US retail sales excluding automotive, gas stations, and restaurants from November 1 through December 31.
The Thanksgiving through Cyber Monday period drew nearly 203 million shoppers to stores and websites, the highest turnout in at least nine years according to NRF surveys. Big-box retailers including Walmart, Best Buy, and Costco topped Wall Street’s quarterly sales expectations.
Consumer spending has outpaced stated intentions throughout the season. PwC analysis shows a 3.2 percent year-over-year increase in fourth-quarter spending, with average expected expenditure rising from $7,591 to $7,834.
What Is the Gap Between Sentiment and Spending?
Surveys consistently show consumers expressing caution about spending, yet actual purchasing behavior tells a different story. According to PwC’s Holiday Outlook, 84 percent of consumers said they expected to cut back over the next six months, citing rising prices, tariffs, and higher cost of living.
The Deloitte Holiday Retail Survey found shoppers expected to spend an average of $1,595 this season, down 10 percent from 2024. Seventy-seven percent of respondents anticipated higher prices on holiday items.
Yet real spending has exceeded these cautious projections. The October Holiday Sentiment Survey found average projected gift spending at $770, up 7 percent from $721 reported in June. Baby boomers indicated a 21 percent spending increase to $855 on average.
This “say-do gap” reflects a fundamental truth about holiday shopping. For many American families, seasonal spending and gift-giving represent essential budget priorities that people are reluctant to reduce even when feeling economically pressured.
How Are Consumers Seeking Value?
The hunt for deals and discounts has intensified. Internet searches for “discount” and “coupon code” climbed 11 percent over the past year. Seven in ten shoppers across all income groups are engaging in value-seeking behaviors.
Gift cards have emerged as a popular way to stick to budgets while preserving gift-giving traditions. Fifty-two percent of survey respondents plan to give gift cards to friends and 47 percent to family members.
Consumers are making trade-offs and seeking creative ways to save, including shopping at affordable retailers over preferred ones, redeeming loyalty points, and making handmade gifts. According to McKinsey, 75 percent of consumers reported trading down in at least one category.
Value-oriented retailers including Walmart, Dollar General, and off-price chains like T.J. Maxx have attracted more high-income shoppers seeking deals. Gap-owned brands have also drawn wealthier consumers looking for quality at accessible prices.
What Trends Are Shaping the Shopping Experience?
Mobile devices have cemented their dominance in holiday shopping. Adobe forecasts mobile revenue share will reach a record 56.1 percent this season, with seven in ten retail site visits occurring on smartphones and tablets.
Buy now, pay later services continue gaining traction. Adobe projects $20.2 billion will be spent through BNPL this holiday season, representing 11 percent growth over 2024.
Artificial intelligence is transforming how consumers discover products. Traffic from AI sources to retail sites is expected to rise 515 to 520 percent compared to the 2024 holidays. Thirty-three percent of consumers plan to use generative AI in their shopping journey, more than double the 2024 figure.
Black Friday through Cyber Monday saw 82 percent of surveyed consumers shopping during the promotional period, up from 79 percent in 2024. However, average spending during BFCM declined 4 percent year over year to $622.
What Challenges Loom Over the Retail Outlook?
The CNBC All-America Economic Survey found 41 percent of Americans planning to spend less this year, six points higher than 2024 and the biggest increase since the inflation surge of 2022. Among those spending less, 46 percent blamed high costs of goods.
Sixty-one percent of respondents believe prices are rising faster than their incomes, including 78 percent of those earning $30,000 or less. This affordability concern is showing up in shopping behavior, with a nine percentage point increase in consumers shopping at online retailers.
Retailers face additional headwinds from the government shutdown, which delays federal spending and reduces private-sector income heading into the peak shopping weeks. Tariff uncertainty continues affecting inventory planning and pricing decisions.
Seasonal hiring has been restrained compared to prior years. NRF expects retailers to add between 265,000 and 365,000 seasonal workers, down significantly from 442,000 hired in 2024.
Despite these challenges, retailers finishing 2025 in a stronger position than many anticipated. Low unemployment, wealth effects from rising home and stock prices, and Americans’ enduring commitment to holiday traditions have combined to support spending even as consumer confidence measures remain subdued.
