Data released over the weekend shows that US retail sales during Black Friday, traditionally considered the busiest shopping day of the year, rose by 4.1% compared to the previous year, according to Mastercard SpendingPulse. Online sales alone reached an impressive $11.8 billion, marking a notable 9.1% increase from 2024, as reported by Adobe Analytics.
However, these figures may be somewhat misleading when accounting for inflation. Experts warn that the actual spending increase could be marginal. Rick Newman, a contributor to The Pinpoint Press, highlighted that with current inflation rates at around 3%, the effective growth in spending could be a mere 1%, questioning whether this represents a significant improvement.
Consumer behavior appears divided, with the Federal Reserve’s latest Beige Book indicating a drop in spending among low- and middle-income households. Meanwhile, wealthier consumers are continuing to spend, particularly on luxury items and travel. Claudia Lombana, a national consumer expert, pointed out that while fewer items are being purchased this holiday season, the average selling prices have risen, reflecting a pivotal shift in consumer habits.
This trend echoes broader economic disparities, often described in terms of a “K-shaped economy,” where higher earners benefit from stock market gains and rising home values, enabling them to spend freely. In contrast, lower-income individuals are increasingly feeling financial pressure, living paycheck to paycheck and seeking discounts to manage rising costs, including essentials like heating and food.
A striking 85% of consumers attribute higher prices to tariffs instituted during the Trump administration, indicating a significant psychological impact on purchasing decisions. Newman noted that while people may not quantify how much tariffs have raised prices on specific items, the awareness influences their shopping behaviors.
As economic uncertainty looms—marked by slowing job growth and a federal government shutdown that has disrupted funding for programs like the Supplemental Nutrition Assistance Program—many consumers are approaching the holiday season with caution. This sentiment is leading shoppers to consider value more seriously, causing them to gravitate toward retailers they believe can help them optimize their budgets.
Retail chains such as Walmart, TJ Maxx, and Gap reported strong sales as they capture a growing market share across various demographic sectors. Conversely, brands like Target and Bath & Body Works have encountered challenges, struggling to maintain sales levels.
Despite these economic pressures, the National Retail Federation (NRF) anticipates a healthy retail performance during the holiday season, predicting a spending increase of 3.7% to 4.2% in November and December compared to last year. The NRF also estimates that total holiday spending will hit a record $1 trillion, surpassing last year’s total of $976 billion.
On Black Friday, spending in categories like apparel saw significant growth, with a 6.1% increase in online sales and a 5.4% rise in in-store purchases, according to Mastercard. Adobe Analytics reported that Thanksgiving sales alone reached a high of $6.4 billion, spurred by significant discounts that attracted shoppers online.
The use of “buy now, pay later” services is also on the rise, with projections suggesting that $20.2 billion will be spent using this method throughout the holiday season—a notable 11% increase from 2024. Lombana noted that many shoppers began their holiday preparations by Halloween, setting the stage for a critical shopping period from Thanksgiving through Cyber Monday.
As retailers gear up for ongoing sales, consumer caution remains evident, though many are still eager to partake in the holiday festivities. The success of Cyber Monday is highly anticipated, with expectations that it will yield strong sales, reinforcing the resilience and adaptability of consumers during challenging economic times.
