For the first time in history, American holiday retail sales are projected to surpass $1 trillion. The National Retail Federation forecasts November and December spending will reach between $1.01 trillion and $1.02 trillion—a 3.7% to 4.2% increase over last year's record $976.1 billion.

The milestone arrives despite persistent inflation concerns, elevated interest rates, and consumer surveys suggesting widespread anxiety about prices. Once again, American shoppers are proving more resilient than the headlines suggest.

What the Forecasts Show

Major research firms are aligned in expecting solid holiday spending growth:

  • National Retail Federation: $1.01-$1.02 trillion (up 3.7%-4.2%)
  • Mastercard Economic Institute: 3.6% year-over-year retail growth
  • Visa Business and Economic Insights: 4.6% growth in retail sales
  • Adobe: Strong e-commerce growth, with mobile exceeding 50% of online spend for the first time

The Consumer Contradiction

Survey data tells a more nuanced story than aggregate spending figures suggest. According to PwC's 2025 Holiday Outlook:

  • 84% of consumers expect to cut back on general spending in coming months
  • 53% say price increases will affect their holiday spending decisions
  • Consumers expect to spend an average of $1,552 per person, down 5% from 2024

Deloitte's survey found even steeper expected declines, with shoppers planning to spend $1,595 on average—down 10% from last year.

So how do record aggregate sales coexist with declining per-person budgets? The answer lies in demographics and behavior shifts.

Generational Dynamics

Not all consumers are cutting back equally:

Gen Z (17-28): Reducing holiday budgets by 23%—the steepest cut of any generation. Many are navigating major life transitions and early careers in a challenging job market.

Baby Boomers: Actually increasing spending by 21% to an average of $855. With solid retirement savings and home equity, older consumers have more financial flexibility.

The aggregate growth reflects Baby Boomers and older Millennials spending more, offsetting reduced spending from younger consumers.

How People Are Shopping

Shopping behavior continues evolving rapidly:

Mobile Dominance

2025 marks the first full year where mobile devices account for over 50% of online spend. Adobe forecasts mobile will hit 56.1% of e-commerce revenue during the holiday season.

Buy Now, Pay Later

BNPL services will account for approximately $20.2 billion in holiday spending—up 11% from 2024. For budget-conscious shoppers, splitting payments helps manage cash flow.

AI-Driven Discovery

Traffic from AI sources (like ChatGPT and other LLMs) to retail sites is expected to rise 515-520% compared to the 2024 holidays. Consumers are increasingly using AI assistants to research products and find deals.

Gift Cards Surge

With 52% of consumers planning to give gift cards to friends and 47% to family, plastic is proving popular as a way to stick to budgets while still giving appreciated gifts.

What Shoppers Are Buying

Consumer priorities reveal interesting trade-offs:

  • Value focus: 78% of consumers are actively seeking less expensive alternatives
  • Experiences over things: Spending on travel and entertainment remains elevated
  • Quality investments: For items they do buy, consumers are willing to pay for durability
  • Charitable giving: Donations to nonprofits remain robust despite budget pressures

What It Means for Investors

The trillion-dollar holiday season has several implications for investors:

Retail Stock Outlook

Companies well-positioned for value-conscious consumers should perform well. Those dependent on discretionary splurges may face pressure.

Payment Processors Win

Visa, Mastercard, and PayPal benefit from increased transaction volumes regardless of what consumers buy.

Logistics and Delivery

Record e-commerce spending means record delivery volumes. FedEx, UPS, and Amazon's logistics network are running at capacity.

BNPL Growth

Affirm, Klarna, and other BNPL providers are capturing an increasing share of holiday transactions.

Beyond the Headlines

The $1 trillion milestone is impressive, but context matters:

Inflation adjustment: In real (inflation-adjusted) terms, spending growth is more modest—perhaps 1-2% after accounting for higher prices.

Wealth concentration: Much of the spending is driven by higher-income households with strong balance sheets.

Credit concerns: Rising credit card balances and BNPL usage suggest some consumers are stretching to maintain spending levels.

The Consumer Resilience Question

American consumers have consistently defied predictions of a spending pullback. Whether this reflects genuine financial strength, irrational optimism, or unsustainable borrowing remains debated.

For now, the $1 trillion holiday season stands as testament to the central role consumer spending plays in the American economy—representing roughly 70% of GDP. As long as shoppers keep shopping, the economy keeps growing.