Donald Trump’s tariffs, government shutdown, rising unemployment and persistent inflation have added stress to the U.S. economy. And whether or not any of this could affect consumer spending remains a matter of speculation.
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At least part of the answer came Tuesday, when Mastercard released its annual holiday spending data. Consumers spent 3.9% more between November 1 and December 21 this year compared to the same period in 2024, according to the SendingPulse report, which measures retail sales in physical and online stores using payments data.
Furthermore, the Bureau of Economic Analysis (BEA), the government agency responsible for measuring and publishing the main indicators of the American economy, reported that, driven by the resilience of consumer and business spending and by more moderate trade policies, the American economy experienced its strongest growth in two years in the third quarter. The data showed that inflation-adjusted U.S. gross domestic product (GDP), which measures the value of goods and services produced in the country, grew at an annualized rate of 4.3%.
The figures, which exclude car sales and are not adjusted for inflation, show that spending has remained resilient, with consumers frequenting stores and restaurants even as prices have risen. However, the report also shows that shoppers are looking for more value, comparing prices in-store and online, and purchasing items at a discount.
The findings offer insight into the mindset of U.S. consumers as they enter 2026, trying to manage their homes amid an uncertain economy.
“Buy now, pay later”
Even as Americans face rising costs of food, child care and rent as job growth slows, many are still opening their wallets to purchase Christmas gifts and items from their own wish lists. Some do this by delaying payment.
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According to a PayPal report from October, half of consumers said they intended to use “buy now, pay later” plans to finance their Christmas shopping.
— Consumers are still a little worried — said Michelle Meyer, chief economist at the Mastercard Economics Institute. — But that didn’t stop them from spending in the short term.
Part of the pressure on consumers comes from tariffs, with retailers in recent months passing on the cost of these fees to shoppers to protect their profit margins.
Target, Gap and Ikea said they had raised prices on some items in response to rising input costs. Retailers have worked to balance these costs with discounts to attract consumers throughout the holiday season.
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Concerns about consumer spending have intensified as the holiday shopping season approaches. The Commerce Department said sales at U.S. retailers and restaurants remained steady in October after modest growth in September, but categories such as clothing and furniture stores remained strong.
As the holidays began in November with Thanksgiving, Walmart CEO Doug McMillon warned investors in a conference call that lower-income families — who rely more on cheaper imported goods — were under greater pressure than wealthier families, who were holding steady.
“When we look at our customers and members here in the United States, they continue to spend, with middle- and upper-income households driving our growth,” McMillon said.
Consumers ready to spend
But during this holiday season, it was clear that consumers were still willing to spend whatever they could, according to the Mastercard report. The strength of the numbers for the period was significant enough that spending wasn’t just coming from isolated pockets of wealthy buyers, Meyer said.
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More than 200 million people shopped over Thanksgiving weekend this year, a slight increase from last year, according to the National Retail Federation, a retail industry association. Mastercard reported that Black Friday retail sales in the United States increased 4.1% this year, driven by increased spending in several categories, including clothing and jewelry.
The clothing sector performed particularly strongly, with stores using discounts to attract shoppers. Holiday spending on clothing increased 7.8%, helped by cold snaps in parts of the country that encouraged a winter wardrobe overhaul, according to Mastercard. Jewelry, a popular gift category, increased 1.6%.
The strong holiday figures in the clothing sector are a welcome sign for an industry that has been hit hard by tariffs, which have inflated import costs from production hubs such as China, Vietnam and Indonesia.
Once the shopping rush ends, economists will look at yield data as a gauge for whether consumers will keep their holiday spending high or be more cautious as the new year approaches.
— Consumers will have to make decisions — substitutions, times of deeper discounts, choices where they can find the best value. — This will continue in 2026 — said Meyer.
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