U.S. consumers are set to spend more this holiday season, driven largely by higher prices as shoppers stay selective about gifts and travel, according to Visa’s latest outlook. The payments giant forecasts a 4.5 percent rise in retail sales for November and December, the strongest growth since 2021.
Retail sales in November and December are projected to rise 4.5 percent from a year earlier, marking the strongest holiday sales growth since 2021, economists at the payments company said in a report released Thursday. However, much of that growth is expected to reflect higher prices rather than an increase in purchasing activity.
Visa expects prices for holiday-related goods to rise 3.4 percent, leaving inflation‑adjusted spending growth of just 1.1 percent, down from 1.3 percent last season. Higher inflation will inflate holiday spending, the report’s authors wrote.
Shoppers Plan Bigger Budgets but Seek Value
Consumers plan to spend an average $777 on gifts, up 5.6 percent from $736 last year. One‑third of households earning under $100,000 say they will switch to cheaper brands or stores.
Consumers are still spending, but they’re making deliberate choices about where their holiday dollars go, said Michael Brown, Visa’s principal U.S. economist. The survey reflects a cautious yet confident spending attitude.
Higher Travel Costs Could Favor Gifts
Rising travel costs are expected to shift some holiday spending toward merchandise. More than half of survey respondents named travel and live events as top wish‑list items, yet only 15 percent plan to prioritize experiences, compared with 27 percent who favor physical gifts.
Visa’s analysis of anonymized credit‑card data showed that only households earning over $200,000 expanded airfare bookings and spending, while all other income groups cut back sharply. That trend suggests high costs are confining travel to affluent families and may push additional dollars into retail purchases.
Other Forecasts Point to Continued Growth
Visa’s outlook aligns with the National Retail Federation, which projects a 4.2 percent year‑to‑year holiday sales increase to just over $1 trillion. NRF expects consumers to stay focused on the holiday season while watching budgets.
Retailers plan to hire between 325,000 and 375,000 seasonal workers, slightly above last year’s 356,000. Mark Mathews, NRF’s chief economist, said strong spending momentum makes consumers the bright spot in the economy. Inflation, rising gas prices and pressure on household spending will affect consumers differently across income groups.
