American retailers are expected to top $1 trillion in holiday sales for the first time this year, but the record is being driven largely by wealthier households while others face rising costs for everyday necessities.
The Boston Globe reports the National Retail Federation forecast Thursday that retail sales will grow 4.2 percent to $1.013 trillion in November and December, up from $972 billion last year and faster than the 3.1 percent gain in 2025. Chief economist Mark Matthews said the total does not mean all Americans are flush with cash. Higher-income households are spending more, while rising gas and food prices pressure lower-income shoppers, producing what he called a “K-shaped” economy in which the wealthy continue to do well and others fall further behind.
Most income groups are now recording year-over-year spending growth, an improvement from last year when lower-income households pulled back. Still, wealthier shoppers dominate: in some retail sectors the top 10 percent of spenders account for as much as 70 percent of sales.
The forecast, developed with Oxford Economics, comes amid rising shipping costs and price-sensitive consumers. Everyday goods including clothing, electronics, and household products are expected to rise faster than last year. Higher diesel prices are lifting freight costs, while demand for chips in the AI data-center boom has pushed some electronics prices up more than 12 percent, according to Bureau of Economic Analysis estimates, affecting televisions, audio equipment, cameras, and computers. Higher gas prices could leave some families with less for gifts; excess tax refunds offset those costs earlier in the year but that effect has worn off, Matthews said.
Fierce competition and shoppers’ focus on affordability will make it hard for retailers to pass along higher shipping costs, he added. Many have already absorbed tariff-related expenses rather than raise prices, and a similar approach is possible with freight. “Consumers are very, very, very value conscious right now,” Matthews said.
Shoppers are also expected to rely more heavily on digital tools. Federation CEO Matthew Shay said use of AI tools while searching for gifts jumped last year and will play a larger role this season, including AI agents.
Retailers have begun hiring seasonal help. The federation projects 325,000 to 375,000 temporary workers, in line with last year’s estimated 356,000.
Fierce competition and shoppers’ focus on affordability will make it hard for retailers to pass along higher shipping costs, he added. Many have already absorbed tariff-related expenses rather than raise prices, and a similar approach is possible with freight. “Consumers are very, very, very value conscious right now,” Matthews said.
Shoppers are also expected to rely more heavily on digital tools. Federation CEO Matthew Shay said use of AI tools while searching for gifts jumped last year and will play a larger role this season, including AI agents.
Retailers have begun hiring seasonal help. The federation projects 325,000 to 375,000 temporary workers, in line with last year’s estimated 356,000.