Holiday retail sales are on track to surpass $1 trillion for the first time in history, according to the National Retail Federation. The milestone comes despite five consecutive months of declining consumer confidence, highlighting the persistent disconnect between how Americans say they feel and how they actually spend.

The Record Numbers

Early data from major payment processors paints a picture of robust spending:

  • NRF forecast: $1.01-$1.02 trillion in November-December spending, up 3.7-4.2% from 2024
  • Visa data: Retail sales up 4.2% year-over-year through December 21
  • Mastercard: Sales rose 3.9% (excluding automotive) over the same period
  • E-commerce: Online sales jumped 7.8% compared to last year

Black Friday and Cyber Monday Records

The holiday shopping season kicked off with record-breaking numbers:

  • Black Friday online: $11.8 billion, up 9.1% from 2024
  • Thanksgiving Day: $6.4 billion in online spending
  • Cyber Monday: Continued the momentum with strong digital sales
  • Total shoppers: 203 million Americans shopped from Thanksgiving through Cyber Monday—the highest turnout in at least nine years

What's Selling

Electronics emerged as the season's top-performing category:

  • Electronics: Sales up 5.8%
  • Apparel and accessories: Up 5.3%
  • Mobile commerce: Expected to hit a record 56.1% of online revenue share

The Buy Now, Pay Later Surge

Flexible payment options have driven significant growth. Adobe forecasts $20.2 billion will be spent through buy-now-pay-later services this holiday season, representing 11% growth over 2024. The trend reflects consumers' desire to spread out payments despite elevated credit card rates.

The Sentiment Disconnect

The spending surge comes against a backdrop of historically weak consumer confidence:

"The underlying surprise here is that consumer spending is holding up reasonably well in light of softer consumer confidence than we had this time last year," noted Visa's chief economist.

Three-quarters of surveyed shoppers (77%) expected higher prices on holiday goods, and over half (57%) expected the economy to weaken in the next six months—the most negative outlook since Deloitte started tracking economic sentiment in 1997.

Who's Spending

The spending boom hasn't been evenly distributed:

  • High-income households: Driving much of the growth, particularly in luxury categories
  • Budget-conscious shoppers: Hunting for deals and using BNPL to manage cash flow
  • Millennials and Gen Z: Leading mobile and online shopping trends

Credit Card Debt Rising

One factor enabling the spending boom: consumers are taking on more debt. Credit card balances have increased throughout the holiday season, with many shoppers stretching to maintain gift-giving traditions despite inflation-eroded purchasing power.

What It Means for Retailers

The strong holiday season provides a tailwind for retail stocks heading into earnings season. Companies expected to benefit include:

  • E-commerce leaders capturing digital share growth
  • Off-price retailers attracting deal-seekers
  • Consumer electronics chains riding category strength

The Bottom Line

Holiday retail sales breaking $1 trillion marks a milestone for American consumerism—and a puzzle for economists. How can spending be so strong when confidence is so weak? The answer likely involves a combination of wealthy households driving growth, consumers drawing on savings and debt, and survey responses reflecting political sentiment more than spending reality. Whatever the explanation, the American consumer continues to surprise on the upside.