What really hides beneath the glitter of America’s holiday sales season
Fed up and burned out after years of inflation, Americans are heading into the 2025 holiday shopping season with fight in them. But in a puzzling twist, this year’s holiday spending may be looking healthier than most people expect — at least on paper.
So what’s going on here?
The retail industry issues start with wealthier shoppers, who are still spending freely, as if there were no affordability crisis. At the same time, middle- and lower-income consumer spending trends are continuing to spend overall, even as they insist that they’re sick and tired of their financial struggles.
But part of that “growth” has a downside: People are simply spending more because prices are still high. On top of already-high costs, inflation persists, which forces people to open their wallets and naturally lifts spending totals.
“Holiday shopping is far from full swing, but US shopping habits are already surfacing,” said Vicki Hyman, communications director at Mastercard, in a recent report. “Inflation is expected to be a larger contributor to sales growth, as opposed to actual sales volume.”
Add it all together, and Black Friday numbers and later holiday market report may tell a slightly rosier story of the economy, even as the underlying financial angst many Americans feel remains out of sight.
“Low-income and high-income households are often living in two different worlds — and experiencing two different economies,” Joe Wadford, senior economist at Bank of America Institute, told CNN.
Strong spending. But…
The period from Black Friday to Christmas will ultimately show just how robust consumer spending really is. Early indicators are pointing in a good direction: Bank of America recently released a report that showed strong numbers for early holiday shoppers this year.
Wages have increased over the past decade and Bank of America says account deposits are now above pre-pandemic levels. That has translated into more credit and debit card use, with household spending up 2.4% in October 2025 compared to October 2024 — the best monthly performance since February 2024. Spending has now increased for five consecutive months.
Holiday-specific spending has seen an even larger increase, surging 5.7% year-over-year in October.
