U.S. consumers showed resilience this holiday season, increasing their retail spending 4.2% year over year, according to preliminary data released Tuesday. visa.
A report from Visa Consulting and Analytics found that despite continuing economic headwinds, shoppers are still continuing to spend, especially on technology and personal items.
The findings tracked payment activity over a seven-week period beginning November 1 using some U.S. Visa payment network data and covered major retail categories, excluding spending on cars, gasoline, and restaurants. This number is also not adjusted for inflation.
In-store shopping accounted for the majority of holiday spending, accounting for 73% of total retail payments during the period, with online purchases accounting for the remaining 27%.
However, e-commerce was the main driver of growth, with online sales increasing 7.8% year over year, reflecting continued demand for convenience and early season promotions.
“The fundamental surprise here is that consumer confidence is softer than it was this time last year and that consumer spending is holding up reasonably well given the many headwinds and inflation concerns,” Michael Brown, chief U.S. economist at Visa, told CNBC.
Brown said the 2025 holiday season marked a clear shift in consumer behavior, citing the increasing influence of artificial intelligence on how shoppers discover products and compare prices.
“We’re seeing consumers leverage AI in a big way in comparison shopping to help narrow down the perfect gift,” Brown said. “This is the first holiday shopping season that nearly half of consumers surveyed said they would use AI for one of these two tasks.”
A breakdown of spending categories highlights a shift from home improvement projects to personal items and convenience.
Electronics emerged as the best-performing category this season, with sales up 5.8%. Visa attributes the surge to refresh cycles from “high-performance devices in the AI era.”
Apparel and accessories also recorded strong numbers, increasing by 5.3%. General merchandise stores (retailers offering a “one-stop” experience) increased by 3.7%.
Conversely, the home improvement sector struggled during the holidays. Spending on building materials and garden supplies fell by 1%, suggesting consumers prioritized gifts and gadgets over home maintenance towards the end of the year.
Furniture and home furnishings were almost flat, registering an increase of 0.8%.
While the headline numbers are positive for the retail sector, the lack of inflation adjustment means that ‘real’ volume growth is likely to be more modest, depending on the final Consumer Price Index reading for the period.
Brown said real spending growth, adjusted for inflation, is currently up about 2.2% this season.
“This isn’t too bad considering there’s a lot of uncertainty this year,” Brown said. “Consumers are uncertain and cautious, but they are also smart about how they spend their money.”
Visa’s numbers also show a disconnect between sentiment and action this season.
According to the CNBC National Economic Survey released last week, 41% of Americans say they plan to spend less this holiday season, up 6 percentage points from a year ago.
A CNBC survey found that the higher cost of goods is a key factor in shoppers’ decisions about how much they spend and where they spend it, suggesting that years of rising import prices due to inflation and tariffs are being felt at checkout.
