U.S. Holiday Retail Sales Projected to Moderate in 2025
Mastercard Incorporated (MA) forecasts U.S. holiday retail sales, excluding automobiles, to increase by 3.6% year-over-year between November 1 and December 24, 2025. This projection, released by the Mastercard Economics Institute, indicates a deceleration from the 4.1% growth observed in the prior holiday season, reflecting a more cautious consumer environment.
Shifting Dynamics in Consumer Spending
The forecast highlights a continued divergence in shopping channels, with e-commerce sales anticipated to rise by approximately 7.9%. Conversely, in-store sales are expected to see a more modest advance of 2.3%. This trend underscores the ongoing shift towards digital purchasing and the necessity for retailers within the Retail Sector and E-commerce Sector to adapt their strategies.
Consumers are exhibiting heightened price-consciousness, influenced by persistent inflation and the impending impact of tariffs. This is leading to earlier bargain-hunting, increased reliance on promotions, and a greater demand for discounts. Gift cards are also gaining traction as a method for consumers to manage costs in an uncertain economic climate. While hiring momentum has eased, the resilience of the labor market, characterized by lower layoffs and steady wage growth, continues to provide foundational support for consumer spending.
Tariff Impact and Retailer Strategies
Tariffs are emerging as a significant "wild card" for the 2025 holiday season, with the potential to elevate the cost of key holiday merchandise such as apparel, toys, and beauty products. The Mastercard report explicitly states, "Inflation will make a larger contribution to overall sales growth than it did during the 2024 holiday shopping season, in part reflecting tariffs." The ultimate impact on household budgets will depend on whether retailers absorb these tariff-driven expenses or pass them on to consumers. An Omnisend survey indicated that 33% of consumers are already observing higher prices, and 19% are actively avoiding certain e-commerce platforms due to tariff concerns.
Broader economic analysis indicates that the U.S. economy is navigating a complex landscape marked by elevated tariffs and the potential for stagflation. Average U.S. tariff rates have surged, reaching levels not seen in over a century, contributing to rising consumer prices and a projected slowdown in GDP growth. Experts suggest that current effective tariff rates could add an additional 1.5 percentage points to the inflation rate over the next year.
Implications for Financial Services and Retailers
Rising transaction volumes are expected to benefit payment processing companies, including Mastercard (MA), Visa Inc. (V), and American Express Company (AXP). **Mastercard
Edgen Stock·Sep 19 2025, 22:15