Picture this: it’s the final weekend before Christmas, malls are packed, online carts are filling up faster than ever, and somehow, despite all the talk of tightening belts, people are still spending. That pretty much sums up the 2025 holiday shopping season. Fresh data shows Americans opened their wallets a bit wider this year, pushing retail spending higher in a way that caught quite a few economists off guard.
Holiday Spending Defies the Gloom in 2025
I’ve always found it fascinating how consumer behavior can tell us so much about the broader economy. This year, preliminary figures reveal that U.S. holiday retail spending climbed 4.2% compared to the previous season. Not bad at all, especially when you consider the mixed signals we’ve been getting from confidence surveys and inflation reports.
The numbers cover a seven-week stretch starting early November and focus on core retail categories—think everything from gadgets to clothing, but leaving out cars, gas, and dining out. They’re not adjusted for inflation yet, which means the real growth story might be a touch more modest, but still solidly positive.
E-Commerce Continues Its Dominance
One trend that keeps gaining steam? Online shopping. Even though brick-and-mortar stores still claimed the lion’s share—around 73% of total spending—e-commerce was the real growth engine. Sales through digital channels jumped 7.8% year over year.
It’s not hard to see why. Early promotions, easy price comparisons, and the sheer convenience of doorstep delivery make online the go-to for many. In my experience following these trends, once consumers get used to that level of ease, there’s no going back. This season simply reinforced that shift.
Perhaps the most interesting aspect is how technology itself is changing the way people shop. More than ever, buyers are turning to artificial intelligence tools to hunt for deals or narrow down gift ideas. It’s the first holiday period where a significant portion of shoppers actively relied on AI for those tasks—and it clearly paid off in higher online volumes.
The underlying surprise here is that consumer spending is holding up reasonably well in light of softer consumer confidence and a number of headwinds.
– U.S. economist from a major payment network
Electronics Lead the Pack Thanks to AI Excitement
If there’s one category that stole the show this holiday season, it’s electronics. Sales in this space surged 5.8%, the strongest performance across the board. What’s driving that kind of growth? A lot of it comes down to the buzz around new high-performance devices tailored for the AI era.
Think powerful laptops, advanced smartphones, and gadgets that promise to make everyday tasks smarter and faster. Consumers seem eager to upgrade, perhaps seeing these tools as investments rather than mere splurges. I’ve noticed in past cycles that tech refresh waves can really propel spending, and this year feels like AI is providing that extra spark.
It’s worth asking: are we at the start of a broader upgrade cycle? Many industry watchers think so. As AI capabilities become more integrated into consumer devices, the appeal of owning the latest model grows stronger. That enthusiasm translated directly into cash registers ringing more often.
- New AI-enabled processors delivering faster performance
- Improved batteries and displays that enhance user experience
- Software features that make AI assistance feel seamless
- Growing ecosystem of compatible accessories and apps
These kinds of innovations create a compelling case for upgrading, even when budgets feel tight elsewhere.
Apparel and Accessories Bounce Back Strongly
Right behind electronics, apparel and accessories posted impressive gains of 5.3%. After a few uneven years, clothing retailers finally saw shoppers returning in force for holiday outfits, gifts, and personal treats.
Maybe it’s the desire to dress up again after quieter seasons, or perhaps better inventory management led to more appealing selections. Whatever the reason, the category benefited from that same mix of online convenience and targeted promotions.
General merchandise stores—those big-box destinations where you can grab everything from toys to household essentials—also did well, up 3.7%. They continue to offer that one-stop convenience many families crave during the hectic holidays.
Home Improvement Takes a Back Seat
Not every sector shared in the cheer, though. Home improvement spending actually declined, with building materials and garden equipment down about 1%. Furniture and home furnishings barely moved, managing only a 0.8% increase.
This divergence makes sense when you think about priorities. During the holidays, gift-giving and personal indulgence tend to take precedence over big renovation projects. Higher interest rates and lingering caution around large discretionary purchases likely played a role too.
In my view, this split highlights how selective consumers have become. They’re willing to spend on experiences and items that feel immediately rewarding, but they’re holding back on longer-term commitments. It’s a smart approach in uncertain times.
| Category | Year-over-Year Change |
| Electronics | +5.8% |
| Apparel & Accessories | +5.3% |
| General Merchandise | +3.7% |
| Furniture & Furnishings | +0.8% |
| Building Materials & Garden | -1.0% |
| Overall Retail (core) | +4.2% |
Looking at the table, the contrast between growth leaders and laggards becomes crystal clear. It’s a snapshot of where consumer enthusiasm—and dollars—are flowing right now.
The Inflation Reality Check
Of course, we can’t ignore inflation entirely. The headline 4.2% growth isn’t adjusted, so once final price index numbers come in, real spending growth will likely settle closer to 2.2%. Still respectable, but it reminds us that rising costs continue to eat into purchasing power.
That said, the fact that volumes held up this well speaks volumes about resilience. Shoppers have grown savvy—hunting deals, leveraging tools like AI for comparison, and focusing spending where it matters most to them.
Surveys heading into the season suggested many planned to cut back, with cost concerns topping the list. Yet actual behavior told a different story. There’s often a gap between what people say they’ll do and what they end up doing when the holiday spirit kicks in.
What This Means for the Bigger Economic Picture
Stepping back, solid holiday numbers provide a welcome dose of optimism for retailers and the broader market. Consumer spending drives a huge chunk of economic activity, so when it holds steady—or even grows—it helps ease worries about slowdowns.
At the same time, the uneven performance across categories offers clues about shifting priorities. Tech and personal goods are winning, while bigger-ticket home projects lag. That pattern could persist into the new year if interest rates stay elevated and caution remains.
I’ve followed these seasonal reports for years, and one thing stands out: holidays often reveal underlying strengths that day-to-day indicators miss. This year feels like another example—consumers may be cautious, but they’re far from tapped out.
Looking Ahead: Trends to Watch
As we move past the holidays, several developments bear watching. Will the AI-fueled electronics momentum carry into regular quarters? Can apparel maintain its bounce? And will home improvement rebound once spring arrives and rates potentially ease?
E-commerce’s outsized role seems locked in for the foreseeable future. Retailers ignoring digital channels do so at their peril. At the same time, physical stores still matter immensely—most spending happens there, after all.
Another factor: how new technologies continue shaping behavior. If AI tools become even more sophisticated at finding deals or personalizing recommendations, expect online growth to keep outpacing in-store in percentage terms.
- Monitor electronics upgrade cycles closely
- Track apparel inventory and promotion strategies
- Watch for signs of home project revival
- Keep an eye on e-commerce innovation
- Assess inflation’s ongoing impact on real growth
These areas will likely determine how the retail narrative evolves through 2026.
In the end, the 2025 holiday season reminded us that consumers are adaptable. They navigate challenges, embrace new tools, and still find ways to celebrate. That’s not just good news for retailers—it’s a positive signal for the economy overall. Here’s to hoping that resilience carries forward.
One final thought: in uncertain times, these spending patterns often act as leading indicators. Strong holidays don’t guarantee smooth sailing ahead, but they certainly suggest the ship is still steadily moving forward. Something worth keeping in mind as we turn the page to a new year.
