The Mastercard Economics Institute (MEI) is forecasting this year’s holiday season to be the strongest holiday season in four years, with spending growth of 5.5% versus the 2025 season.
In its annual holiday forecast for the United States, which excludes automobile and fuel sales, MEI said the 5.5% year-over-year spending increase between November 1 and December 24 would likely be broad based, crossing channel lines. Based on SpendingPulse insights, representing in-store and online activity across all forms of payment, MEI predicts online sales growth of 11% year over year, with a concurrent 3.6% in-store sales gain, which would be the strongest showing for physical retail in four years.
Consumers are in relatively good shape financially as the season approaches, MEI maintained. A strong job market, which supports wage and household wealth growth, has helped sustain 2025 spending. Although higher-income households have set the pace, spending has been solid across income cohorts, according to the organization.
Still, prices are part of the holiday story, and MEI estimates about half the spending growth will be based on higher prices, a pattern that’s been evident across recent holiday seasons. Yet, MEI added, this year the trend has been amplified by higher energy costs and AI-driven demand.
Artificial intelligence is becoming more deeply embedded in everyday life as the rise of agentic commerce introduces new ways for consumers to discover products, compare options and find value. AI power users — defined as consumers with paid AI subscriptions –— have tended to get into holiday spending mode earlier. In 2025, they spent a larger share of their holiday dollars before Thanksgiving than non-AI users. Also, AI power users spread their spending across a broader set of merchants, including smaller and boutique retailers, a trend evident in competitive discretionary categories such as beauty services, specialty food stores, florists and restaurants. The upcoming holiday season will offer a window into how retail tech developments intersect with consumer behavior, MEI stated.
The calendar is having a particular affect on the 2026 holiday season. Thanksgiving falls late again this year, compressing the Christmas shopping window and potentially encouraging retailers to begin promotions earlier. The bigger change from last year is that Cyber Monday lands in November, which will concentrate online shopping into one long weekend that will have a major impact on results for the month and, in all probability, December, according to MEI.
MEI noted that not every shopper plans ahead, which has specific effects on the season. In 2025, MEI found that more than 35% of in-store spending on jewelry and cosmetics, as well as in department stores, that occurred between November 22 and December 25 came in the final week before Christmas. Across online and in-store purchases in those same categories, average purchase value rose every day beginning December 15 and peaked on Christmas Eve, MEI noted.
Malls become more important as the holiday clock winds down. MEI estimates more than 6% of annual spending at U.S. shopping malls occurs during the week before Christmas, roughly double the share at comparable gift-oriented retailers operating outside of malls.
Electronics is a category to watch in the holiday season, MEI pointed out. Strong demand for memory chips and other components tied to the AI infrastructure buildout has contributed to a 12.2% year-over-year increase in the Personal Consumption Expenditures Price Index for video, audio, photo and information-processing equipment, which represents a departure from normal in a category where prices have historically declined. MEI reported it expects consumer electronics and software to deliver outsized growth this holiday season after gaining 10.7% year over year so far in 2026. The development is noteworthy not only for core electronics products but also the range of associated merchandise, from gaming desks to hydration bottles, that gains from more activity in the category.
