Data released Saturday by Mastercard SpendingPulse revealed that US retail sales during Black Friday, traditionally the heaviest shopping day of the year, increased by 4.1% compared to the preceding year. Separately, the data collection platform Adobe Analytics reported that digital shoppers alone contributed $11.8 billion in revenue, marking a 9.1% rise from 2024 figures.
However, these reported increases fail to account for the impact of heightened prices driven by inflation, suggesting that actual expenditure levels might merely be stagnant.
Rick Newman, author of The Pinpoint Press newsletter focused on the US economy, stated to CNN on Friday, “Given that inflation stands at 3%, the reported 4.1% rise in spending might translate to a real increase of only about 1%, which is not a substantial gain.”
Moreover, a divergence is evident in consumer demographics driving spending. The Federal Reserve’s latest Beige Book, which compiles economic observations, indicated a downturn in purchasing activity among individuals with low to middle incomes. Conversely, the Fed noted that affluent consumers are sustaining their spending habits, including making purchases in sectors like luxury goods and travel.
According to Claudia Lombana, a national expert on consumer trends, shoppers have acquired fewer items this holiday period, though the average prices at which these goods were sold are higher.
Lombana informed CNN’s Omar Jimenez on Saturday, “Those with greater financial capacity are spending freely, but those who are less well-off are operating within strict budgets.”
This situation reflects what is termed the K-shaped economy: high-earners benefit from growth in their stock portfolios and property values, allowing them to spend more from their enhanced incomes. In contrast, lower earners increasingly live paycheck to paycheck and are compelled to seek out discounts or reduce overall spending to manage rising costs.
Newman described the current economic landscape as “bifurcated. If you are fortunate enough to possess stock investments and own a home, you are situated on the upper arm of that inverted V—that K-shaped economy… you will likely feel comfortable spending a significant amount this year.”
Yet, Newman pointed out that those on the lower segment of the K—individuals who do not hold stocks or property—are experiencing growing unease regarding job stability.
“I anticipate those individuals will be tightening their belts this holiday season,” he commented, adding that they will adopt a more frugal approach to both gifts and necessities. He cited rising heating bills due to increased natural gas prices, and grocery costs that are climbing while rent increases outpace income growth, as examples of their financial pressures.
Eighty-five percent of consumers anticipate higher prices as a consequence of tariffs imposed by President Donald Trump, according to the National Retail Federation (NRF). This expectation influences their purchasing behavior.
Newman suggested, “While no one is meticulously calculating increases on an item-by-item basis saying, ‘The Trump tariffs have raised the cost here by 4% or 10%,’ it is certainly something on people’s minds.”
The concept of value has acquired paramount importance for consumers today. Consumer confidence is subdued, job creation has decelerated, and a federal government shutdown led low-income shoppers to curb spending when Supplemental Nutrition Assistance Program (SNAP) funding was temporarily halted.
As everyday Americans find it increasingly difficult to afford goods and services, shoppers have become more selective regarding where and how they spend, actively searching for advantageous deals. They are directing their patronage toward retailers they perceive as better equipped to maximize their budgets across essential categories like groceries, household items, apparel, and electronics.
Retail chains such as Walmart, TJ Maxx, and Gap are reporting positive results, showing strong sales figures in their recent quarterly reports. Walmart, specifically, is reportedly capturing market share across all income brackets and in various product categories.
Conversely, other companies, including Target and Bath & Body Works, are encountering difficulties.
Bath & Body Works also indicated that consumers are curtailing personal splurges on gifts for themselves.
Despite ongoing financial strain from the cost of living and other economic headwinds, shoppers are still projected to spend generously this holiday period. The NRF forecasts overall retail sales for November and December to increase between 3.7% and 4.2% compared to the previous year, a growth rate similar to the prior year’s rise.
Further numerical insights:
The NRF projects a record $1 trillion in holiday spending this year, an increase from last year’s $976 billion.
On Black Friday, sales growth was 6.1% online and 5.4% in brick-and-mortar stores for apparel, with Mastercard noting this reflected shoppers “refreshing wardrobes while leaning into value-driven choices and convenience.” According to Adobe Analytics, consumers established a new record by spending $6.4 billion online on Thanksgiving Day, a 5.3% rise from the previous year, driven by significant promotional offers that encouraged digital purchasing.
Vivek Pandya, lead analyst at Adobe, stated in a release Friday, “The scale of the discounts was the defining feature of Thanksgiving yesterday, as retailers aggressively offered compelling deals to spur online consumer demand.”
Furthermore, the ‘buy now, pay later’ (BNPL) method remains a significant transactional tool for shoppers this holiday season. Adobe estimates that $20.2 billion will be transacted via BNPL between November 1st and December 31st, representing an 11% year-over-year increase from 2024.
Lombana observed, “We saw half the population in America already shopping by Halloween this year for the holiday period.” She added, “While this five-day window from Thanksgiving through Cyber Monday is crucial for retailers, both online and in-store, we do anticipate strong performance from Cyber Monday.”
She concluded by noting that while “consumers are certainly demonstrating more caution, they also wish to embrace the holiday spirit during this season.”
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