For the first time in history, American consumers spent more than $1 trillion during the holiday shopping season, according to final data released this week from the National Retail Federation and major payment processors. The milestone caps a holiday season that defied persistent consumer pessimism and validated retailers' bets on deep discounts and extended promotional periods.

Total holiday spending rose approximately 4% compared to 2024, with Mastercard SpendingPulse tracking a 3.9% increase and Visa reporting gains of 4.2% over the seven-week period beginning November 1. Both figures aligned closely with the NRF's early November prediction that 2025 would be the first trillion-dollar holiday season.

E-Commerce Continues to Dominate Growth

The headline growth numbers mask a significant shift in how Americans shopped. E-commerce sales surged 7.4% according to Mastercard and 7.8% per Visa data, far outpacing the modest gains in brick-and-mortar retail.

Despite the online surge, physical stores still accounted for 73% of total holiday payment volume, according to Visa. But the trend is clear: digital commerce is capturing an ever-larger share of the pie, and retailers who haven't invested heavily in their online capabilities are being left behind.

"The consumer is resilient, but the consumer is cautious. Americans are feeling down about the economy, but Americans are still buying."

— Washington Post analysis of holiday spending data

The Value-Seeking Consumer

Perhaps the most striking trend of the 2025 holiday season was the dramatic outperformance of value-oriented retailers. Thrift shops saw traffic jump 11.7%, while off-price retailers like TJX and Ross posted gains of 6.6%.

By contrast, luxury chains and traditional department stores managed only meager increases of 1.8%. The data paints a picture of an American consumer who is willing to spend but is increasingly strategic about where those dollars go.

Warehouse clubs and discount retailers performed particularly well, suggesting that the inflation fatigue of recent years has fundamentally altered shopping behavior. Even as overall spending hit record levels, consumers demonstrated a heightened sensitivity to value that may persist long after economic conditions normalize.

Category Winners and Losers

Apparel emerged as one of the season's strongest categories, with expenditures jumping 7.8%. Analysts attributed the surge to a combination of cold-weather necessities and traditional gift-giving, as well as attractive promotional pricing from major retailers.

Restaurant spending also showed strength, rising 5.2% over the 2024 holiday season as Americans continued to prioritize experiences and convenience. Jewelry sales, often a bellwether for consumer confidence, posted a modest 1.6% increase.

Holiday 2025 Spending by Category

  • Apparel: +7.8%
  • E-commerce (overall): +7.4% to +7.8%
  • Thrift stores: +11.7% (traffic)
  • Off-price retail: +6.6% (traffic)
  • Restaurants: +5.2%
  • Luxury retail: +1.8%
  • Jewelry: +1.6%

The Sentiment Paradox

The record-breaking holiday spending occurred against a backdrop of remarkably sour consumer sentiment. According to University of Michigan data, consumer confidence has fallen to its lowest point since the peak of pandemic-era inflation in 2022.

This disconnect between how Americans feel about the economy and how they actually spend has become one of the defining features of the current economic moment. Economists have dubbed it the "vibecession"—a period where economic metrics remain solid but public perception lags significantly behind reality.

Several factors may explain the paradox:

  • Accumulated savings: Many households still have buffers from pandemic-era stimulus and reduced spending during lockdowns
  • Strong employment: Despite recent softening, the labor market remains historically tight, giving workers confidence in their income streams
  • Promotional intensity: Retailers' aggressive discounting may have pulled forward spending that consumers might otherwise have deferred
  • Buy-now-pay-later: The proliferation of installment payment options has made large purchases more accessible

What It Means for 2026

The trillion-dollar holiday season offers both encouragement and warning signs for the year ahead. On the positive side, American consumers clearly retain significant spending power and willingness to deploy it when they perceive value.

However, the heavy reliance on promotions to drive sales raises questions about retail profit margins. And the dramatic outperformance of value-oriented channels suggests that the bifurcation of the American consumer—between those who can afford premium products and those who cannot—is accelerating.

For investors, the holiday data reinforces the importance of positioning in the right segments of the retail landscape. Discount and off-price retailers appear well-positioned to continue gaining share, while traditional department stores and luxury players face a more challenging environment.

The $1 trillion milestone is worth celebrating as a testament to the resilience of American consumer spending. But the details beneath that headline number tell a more nuanced story of an economy where growth is uneven and value has become the watchword.