The American consumer, once again, defied the skeptics. Despite persistent inflation, elevated interest rates, and the most pessimistic economic outlook in nearly three decades, holiday retail spending crossed the $1 trillion mark for the first time in history during the 2025 season.

According to the National Retail Federation, spending in November and December totaled between $1.01 trillion and $1.02 trillion, representing growth of 3.7% to 4.2% over 2024. Visa's analysis of payment flows confirmed 4.2% year-over-year growth through the first seven weeks of the holiday period.

E-Commerce Continues to Dominate

The shift to online shopping accelerated in 2025, with e-commerce growing 7.8% compared to just 2.2% growth for in-store sales after adjusting for inflation. Mobile devices cemented their dominance, with 2025 becoming the first full year where mobile captured more than 50% of online spending.

Adobe's holiday forecast projected mobile revenue share would hit a record 56.1% this season, reflecting the continued maturation of shopping apps and mobile payment systems.

"What we're seeing is the permanent transformation of American retail. Mobile isn't just another channel anymore—it's becoming the primary channel for many consumers, especially younger ones."

— Vivek Pandya, Lead Analyst at Adobe Digital Insights

While e-commerce grabbed headlines, brick-and-mortar stores still captured 73% of total retail payment volume. However, the in-store experience has evolved to support digital journeys, with buy-online-pickup-in-store (BOPIS) and same-day delivery blurring the lines between channels.

Electronics Lead the Way

The holiday season's standout category was electronics, with sales climbing 5.8%—the strongest growth of any major segment. Visa attributed the surge to a refresh cycle driven by "high-performance devices in the AI era."

New laptops, tablets, and smartphones featuring advanced AI capabilities attracted consumers looking to upgrade aging devices. The gaming sector also contributed, with new console releases and gaming accessory bundles performing well throughout November and December.

Other strong performers included:

  • Apparel and accessories: Up 5.3%, benefiting from colder weather in key markets
  • General merchandise: Rose 3.7% as department stores held their ground
  • Restaurants: Gained as consumers combined shopping trips with dining

Home improvement was the notable laggard, with spending on building materials and garden equipment falling 1% as elevated mortgage rates continued to suppress housing turnover and renovation activity.

The Sentiment Paradox

Perhaps the most striking aspect of the 2025 holiday season was the disconnect between consumer behavior and consumer sentiment. Three-quarters of surveyed shoppers expected higher prices on holiday goods, and 57% expected the economy to weaken over the next six months—the most negative outlook since Deloitte began tracking economic sentiment in 1997.

Yet they kept spending. Several factors help explain the paradox:

Wealth effects: Stock market gains lifted household net worth, particularly for higher-income consumers who drive a disproportionate share of spending.

Employment stability: Despite softening, the job market remained functional, providing income to support purchases.

Holiday tradition: The cultural importance of holiday gift-giving proved resilient, with many consumers unwilling to scale back on celebrations.

Buy now, pay later: Adobe forecast $20.2 billion in BNPL spending during the holiday season, up 11% from 2024, suggesting some consumers stretched budgets through installment financing.

Value Wins

While overall spending grew, consumers demonstrated clear price sensitivity. Traffic at thrift stores jumped nearly 11% in the week before Christmas compared to 2024, and value-oriented retailers like Walmart and T.J. Maxx gained market share across income levels.

The trend toward value shopping reflected both persistent inflation concerns and savvier deal-hunting. Consumers increasingly used price comparison apps, waited for promotions, and shifted spending toward private-label products that offered similar quality at lower prices.

The AI Revolution in Retail

One emerging trend with potentially transformative implications: traffic from AI sources (large language models like ChatGPT) to retail sites surged 515% to 520% compared to the 2024 holiday season.

Consumers are increasingly using AI assistants for product recommendations, gift ideas, and comparison shopping. For retailers, this creates both opportunities and challenges—those who optimize for AI discovery may gain an edge, while others risk becoming invisible to this new discovery channel.

Regional and Demographic Patterns

Spending patterns varied significantly across demographics and regions:

  • Income gap: Spending among the top third of households grew 4% year-over-year, while lower-income household spending remained essentially flat
  • Urban vs. suburban: Metropolitan areas with strong job markets outperformed rural and exurban regions
  • Age divide: Gen Z and millennial consumers drove growth in electronics and experiential gifts, while boomers focused on more traditional categories

What It Means for 2026

The trillion-dollar holiday season provides a positive starting point for retail in 2026, but questions remain about sustainability. With the personal savings rate near post-pandemic lows and credit card debt at record highs, some analysts worry that holiday strength may have borrowed from future quarters.

Retail earnings in late January and February will provide the first real-time check on whether the holiday momentum continues or whether consumers begin pulling back after the seasonal surge.

For now, the $1 trillion milestone stands as testament to the American consumer's remarkable resilience—and to the enduring power of holiday tradition to drive spending even in uncertain times.