Economic uncertainty and shifting calendar dynamics are set to shape Holiday 2025, with Mastercard Economics Institute forecasting 3.6% retail sales growth as tariffs, inflation and labor trends test consumer spending.
The calendar will also have a say in spending.
MEI, using Mastercard SpendingPulse insights, including in-store and online spending across all forms of payment, estimated that retail sales excluding autos will grow by 3.6% year-over-year during the 2025 holiday shopping season from November 1 to December 24. During the timeframe, MEI anticipates that e-commerce retail sales, excluding automobile purchases, will grow by 7.9% year over year, while in-store sales will gain 2.3%.
Inflation will make a larger contribution to overall sales growth than it did during the 2024 holiday shopping season, MEI maintained, in part reflecting tariffs.
Tariffs are a key uncertainty for 2025, as items that are typically popular holiday purchases are subject to higher tariff rates than they were in 2024. The extent to which tariff hikes directly impact consumers is difficult to precisely ascertain, MEI pointed out, as some retailers choose to partially absorb the costs involved to remain competitive in terms of price and volume. In the current marketplace, larger retailers that purchased and stocked holiday items in advance of tariff changes are likely to have a competitive advantage. The impact of tariffs on consumer prices is not yet apparent on a broad scale, MEI indicated, but early signs have emerged that they could affect many gift categories.
In 2025, holiday shoppers will search for value amid broader economic uncertainty, with decisions driven, in part, by the health of the labor market and tariff-related price increases.
Although the labor market continues to support consumer spending, low hiring rates and other signs of moderation across major sectors have begun to emerge, MEI pointed out. Still, a low firing rate is partially tempering the effects of the hiring slowdown, and consumers continue to benefit from wage growth, which largely keeps pace with, or even exceeds, price inflation, which is a positive development going into the holidays.
MEI analysis suggests that various demographic cohorts will approach the 2025 holiday shopping season in their own unique ways. Overall wage growth remains solid but is more moderate for workers in lower-paid sectors. Wealth is growing among higher-income consumers who are more likely to own stocks. As of September 10, the S&P 500 was up 18% from a year earlier, giving many high-income consumers more freedom to spend on discretionary purchases during the holidays if they choose to do so.
Calendar shifts will matter as well. In 2025, Thanksgiving will fall on November 27, the second-latest possible date, shortening the period between Thanksgiving and Christmas. The calendar in 2025 could boost online sales at the beginning of December and prompt retailers to start promotions earlier than usual, MEI noted.
