What did holiday shopping reveal about the US economy?
Holiday shopping season sets forth an annual gut check for the U.S. economy, prompting buyers to splurge in a show of optimism or cut back out of fear of what next year holds.
In 2025, shoppers opened their wallets with gusto, though consumers appeared to favor low-cost options and discounts, according to spending data shared with ABC News.
The performance defied concerns overhanging the economy for months, as hiring slowed and inflation ticked higher. Seemingly undeterred, shoppers flexed their strength at the close of this year, offering some reassurance for the wider economy. Consumer spending accounts for about two-thirds of U.S. economic activity.
Holiday sales climbed 3.9% compared to last year, Mastercard SpendingPulse data showed, tracking online and in-store payments from the start of November to Christmas Eve. The data leaves out car sales and does not account for inflation.
The season-long buying spree followed a strong showing early on, as consumers revved up at the outset of the holiday season.
Digital spending on Thanksgiving jumped 5% from a year earlier, totaling $6.4 billion and exceeding expectations, Adobe Analytics data showed. On Black Friday, shoppers topped the previous day’s pace, as spending soared about 9% compared to 2024, adding up to $11.8 billion, Adobe found.
Adobe attributed the strong performance to better-than-anticipated discounts, especially for electronics. Discounts also touched an array of products from furniture to appliances to toys.
The search for price-savings marked a trend that would continue over the coming weeks.
While overall spending jumped, the largest uptick could be found in low-cost categories, according to Placer.ai, a data firm.
For instance, thrift shops and off-price retailers topped the apparel market with traffic up 11.7% and 6.6% respectively, compared to last year, Placer.ai said. Luxury chains and department stores, by comparison, posted meager gains of 1.8%, the data showed.
"Bifurcation has been a defining trend of consumer behavior in 2025 and continued to shape shopping patterns during the holiday season," said Shira Petrack, head of content at Placer.ai.
Consumer spending among middle- and low-income Americans slowed earlier this year, triggering warnings from restaurant giants such as McDonald’s and Chipotle. A report this month showed consumer sentiment has fallen to its lowest point since a peak of pandemic-era inflation in 2022, University of Michigan data showed.
As of October, roughly half of buyers planned to use a by-now-pay-later plan for holiday shopping as a means of managing their budget, PayPal said.
Still, consumers have continued to power economic growth, even as they have balked at prices.
In the fall, shoppers helped propel the fastest quarterly U.S. economic growth in two years, federal government data last week showed.
The economy grew at a robust annualized rate of 4.3% in the third quarter in the government's initial estimate, marking an acceleration from 3.8% growth recorded in the previous quarter, the U.S. Commerce Department said.
"Just as they have for several years now, the U.S. consumer continues to carry the baton for the economy," Bret Kenwell, U.S. investment analyst at eToro, told ABC News in a statement.
