What's happened
U.S. holiday retail sales grew modestly, with a 3.9% increase over last year, despite economic concerns. Consumers are spending more at thrift and discount stores, reflecting economic uncertainty and a bifurcated economy. Traditional retailers face increased competition from off-price and second-hand sectors.
What's behind the headline?
The 2025 holiday shopping season reveals a clear bifurcation in consumer behavior. Wealthier shoppers continue to spend confidently, often on high-end and luxury items, while lower- and middle-income consumers are increasingly turning to thrift stores and discounters. This divergence is driven by economic uncertainty, inflation, and a perception that traditional retail offers less value.
Visa and Mastercard data show that overall sales growth has slowed compared to previous years, with inflation-adjusted figures indicating a modest 2.2% increase. Meanwhile, traffic at thrift stores has surged, with visits up nearly 11% year-over-year, and the average household income of thrift shoppers rising slightly to $75,000. This suggests that economic pressures are compelling a broader demographic to seek value.
The shift toward second-hand shopping also reflects environmental concerns and a desire for unique or vintage items, further diversifying consumer spending patterns. Traditional retailers are feeling the pressure, with traffic in department stores falling 13.2% compared to last year, while off-price chains and thrift stores gain ground.
Looking ahead, this trend indicates a sustained polarization in consumer spending. Retailers will need to adapt by offering more value-oriented options and embracing second-hand markets to remain competitive. The economic outlook remains uncertain, but the data suggests that the 'K-shaped' recovery will persist into 2026, with wealthier consumers fueling growth while others tighten their belts.
What the papers say
The New York Times reports that holiday spending remains resilient, with consumers seeking value and using buy now, pay later options, despite economic worries. Mastercard's data shows a 3.9% increase in spending from November 1 to December 21, highlighting consumer confidence in the short term. Conversely, AP News notes that overall sales growth slowed to 4.2%, with inflation-adjusted figures indicating a more modest 2.2% rise, reflecting cautious spending amid inflation and tariffs. The contrasting perspectives underscore the ongoing polarization in consumer behavior, with the wealthy continuing to spend confidently while others become more frugal, especially at thrift and discount stores.
How we got here
Recent reports indicate that holiday retail sales in the U.S. have been resilient, with consumers spending more overall despite inflation and economic worries. Data from Visa, Mastercard, and Adobe highlight a shift in shopping behaviors, with more consumers turning to thrift stores and discounters, driven by economic concerns and rising prices. The concept of a 'K-shaped' economy, where the wealthy spend confidently while others tighten budgets, is increasingly evident in recent surveys and sales figures.
Go deeper
Common question
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Why Did Holiday Retail Sales Grow Despite Economic Worries?
Despite concerns about inflation and slowing economic growth, holiday retail sales in 2025 have increased. This surprising resilience raises questions about what’s driving consumer confidence and spending habits this year. Are shoppers still prioritizing value? How is credit influencing their decisions? And what does this all say about the overall US economy in 2025? Below, we explore these questions and more to understand the trends shaping holiday spending today.
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How Did Holiday Spending Change in 2025?
This year, holiday shopping in the U.S. showed signs of resilience despite economic worries. Consumers are spending more overall, but their shopping habits are shifting—more people are turning to thrift stores and discount retailers. Wondering what this means for the economy and traditional retailers? Keep reading to find out how holiday spending trends in 2025 reflect broader economic shifts and consumer behavior.
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