The 2025 holiday shopping season has emerged as a critical indicator of the U.S. economy, revealing a complex landscape shaped by shifting consumer behavior and economic pressures. As the season came to an end, several key trends stood out. Hiring came to a halt, inflation reached a record high, and consumer sentiment plummeted, particularly among middle- and low-income Americans.
According to the preliminary University of Michigan consumer sentiment index for November, consumer sentiment has plummeted. It currently stands at its lowest level since the apex of pandemic-related inflation during 2022. Despite signs of inflation continuing to worsen, a triple-indexed base continuing to fuel a long-term hairstyle contributed to a cautious tendency toward expenditure. Reports from McDonald’s and Chipotle highlighted that consumer spending among these demographics had already slowed earlier in the year, signaling challenges for retailers.
The abundant hurdles still left shoppers with a glimmer of resilience across Black Friday shopping. Consumers spent $11.8 billion on the day, representing a 9% increase from 2024. Luxury retailers and department stores only managed gains of 1.8%. That means that even though total spending increased, this growth has not been shared widely across the retail industry.
Holiday sales jumped a whopping 3.9% over last year’s totals! Mastercard SpendingPulse, which tracks both online and in-store payments, saw spending increase from early November through Christmas Eve. This data just further highlights how important consumer spending is to our economic recovery, making up about two-thirds of all U.S. economic activity. The robust annualized growth rate of 4.3% recorded in the third quarter further emphasizes that while challenges exist, the economy shows signs of strength.
“Just as they have for several years now, the U.S. consumer continues to carry the baton for the economy,” stated Bret Kenwell, a U.S. investment analyst at eToro. This comment reflects the continuing attitude that consumer spending is the only thing keeping the economy growing and moving forward.
To add to the challenges, the consumer landscape has changed drastically. Shira Petrack, head of content at Placer.ai, noted that “bifurcation has been a defining trend of consumer behavior in 2025 and continued to shape shopping patterns during the holiday season.” This bifurcation indicates that for every consumer that has the willingness and ability to spend, there are clearly others who are more cautious, weighing on overall sales dynamics.
Out of all holiday shoppers as of October, nearly half said they were planning to use buy-now-pay-later schemes. This trend is indicative of a broader shift in consumer attitudes toward credit and discretionary spending, driven by ongoing economic uncertainty.
