U.S. Holiday Spending 2025: Americans Spent More, but With Caution

At first glance, the 2025 U.S. holiday shopping season looks like a success. Americans spent more than last year, stores were busy, and total sales hit new records. But beneath the headline numbers, the story is more nuanced: consumers spent cautiously, leaned heavily on discounts, and revealed clear signs of financial strain in certain groups.

The result was a holiday season defined less by exuberance and more by selective spending, value hunting, and uneven consumer health.

Headline Numbers: Spending Rose, but Modestly

U.S. holiday retail sales rose in the low single digits compared with 2024.

1. Visa reported that total U.S. retail spending during the holiday period increased about 4% year over year, driven primarily by services and experiences rather than goods.
2. The National Retail Federation (NRF) projected that total U.S. holiday sales surpassed $1 trillion for the first time, up from roughly $976 billion last year.
3. Mastercard SpendingPulse data similarly showed growth, but described it as moderate, not a boom.

Key point: Americans spent more dollars than last year, but growth was slower than in the immediate post-pandemic years, when spending surged.

Inflation Changes the Picture

Once inflation is factored in, the story looks less impressive.

1. According to economists cited by NRF and McKinsey, inflation-adjusted (real) holiday spending was flat to slightly positive, meaning many households paid more but did not necessarily buy more.
2. Higher prices for everyday goods meant that a larger share of holiday budgets went toward fewer items.

As McKinsey noted in its late-2025 consumer survey, many households described their spending as “necessary rather than indulgent.”

Who Spent — and Who Pulled Back

Higher-Income Households: Still Spending

1. According to McKinsey, upper-income households continued to spend freely, especially on travel, dining, and premium gifts.
2. This group showed little pullback and largely drove the aggregate growth in holiday spending.

Middle-Income Consumers: Selective and Strategic

1. Middle-income shoppers remained active but leaned heavily on promotions.
2. Deloitte’s Holiday Retail Survey found that Americans increasingly timed purchases around Black Friday and Cyber Monday rather than buying throughout December.

Lower-Income Consumers: Clear Signs of Stress

Lower-income households were the most constrained. According to McKinsey and Cint consumer surveys, this group was more likely to:

1. Reduce gift spending
2. Rely on discounts
3. Use Buy Now, Pay Later (BNPL) services to manage cash flow

This divergence explains why overall spending rose even as many Americans reported feeling financially stretched.

What Americans Bought

Experiences Over Things

1. Visa and Mastercard both reported strong growth in spending on experiences — travel, entertainment, and dining — continuing a post-pandemic trend.
2. Experiences were often framed as “better value” than expensive physical gifts.

Strong Categories

According to NRF and Visa:

1. Electronics and tech performed well, particularly discounted items
2. Apparel and accessories saw steady demand
3. Toys remained resilient, especially in the weeks before Christmas

Weaker Areas

1. Luxury goods underperformed compared with mass-market retailers, as reported by Morgan Stanley retail analysts
2. Home goods and furniture remained soft, reflecting slower housing activity

Online vs. In-Store Shopping

Despite years of digital growth, Americans still preferred physical stores.

1. Visa data shows that roughly three-quarters of holiday spending occurred in-store
2. Online sales grew faster than in-store sales, but from a smaller base
3. Mobile shopping continued to gain share, especially among younger consumers

Retailers that blended online discounts with in-store pickup performed best.

Discounts, AI, and Smarter Shopping

One of the most striking trends of the 2025 season was how deliberate shoppers became.

1. According to Simon-Kucher and Deloitte, a growing share of consumers used:
2. AI tools to compare prices
3. Apps to track discounts
4. Automated alerts for deals
5. Nearly half of shoppers said promotions influenced when they bought, not just what they bought

This shift explains why retailers extended promotions well beyond Black Friday.

Buy Now, Pay Later: A Growing Crutch

Flexible payment options played a larger role this year.

1. Adobe Analytics and Deloitte both reported increased BNPL usage during the holiday season
2. While BNPL helped sustain spending, economists warn it may mask underlying stress, particularly among younger and lower-income consumers

Consumer Confidence vs. Consumer Spending

Perhaps the most important contradiction of the season:

1. Conference Board and University of Michigan surveys showed consumer confidence remained subdued
2. Yet spending still rose

The explanation, economists say, is simple: Americans are still spending — but doing so with caution, trade-offs, and far more planning than in previous years.

What the 2025 Holiday Season Really Tells Us

The 2025 holiday shopping season was not a story of exuberance or collapse.

It was a story of:

1. Resilient higher-income consumers
2. Careful middle-class budgeting
3. Financial stress at the lower end
4. A shift toward experiences and value
5. Nominal growth masking real pressure from inflation

As McKinsey put it, the modern American consumer is no longer impulsive — but strategic.

That may keep spending afloat in the short term. But it also suggests that future growth will depend less on confidence and more on promotions, income growth, and relief from rising costs.