U.S. consumers displayed notable resilience this holiday season, driving retail spending up 4.2% year over year, according to preliminary data released Tuesday by Visa.
The report from Visa Consulting and Analytics shows that despite lingering economic headwinds and ongoing concerns about inflation, shoppers continued to spend, particularly on technology and personal goods.
The findings, based on a seven-week period beginning Nov. 1 and drawn from a subset of Visa’s payments network data in the U.S., cover core retail categories while excluding spending on automotive, gasoline, and restaurants. Figures are reported in nominal terms and are not adjusted for inflation.
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In-store purchases accounted for the bulk of holiday spending, capturing 73% of total retail payment volume, while online purchases made up the remaining 27%. E-commerce, however, was the primary driver of growth, rising 7.8% compared with last year, reflecting continued demand for convenience, early-season promotions, and increasingly AI-assisted shopping behavior.
Michael Brown, principal U.S. economist at Visa, noted the underlying surprise in the report, saying: “Consumer spending is holding up reasonably well in light of softer consumer confidence than we had this time last year, amid a number of headwinds and concerns about inflation.”
Brown highlighted that the 2025 holiday season marked a distinct behavioral shift, with artificial intelligence influencing how consumers compare products and make purchase decisions. Roughly half of consumers surveyed reported using AI for either comparison shopping or narrowing down gift options, marking the first holiday season with such widespread AI adoption.
Spending Categories and Consumer Trends
The breakdown of spending across categories shows a shift toward personal goods and convenience. Electronics emerged as the top-performing sector, posting a 5.8% increase, attributed to a refresh cycle driven by “high-performance devices in the AI era.” Apparel and accessories rose 5.3%, while general merchandise stores—retailers offering a one-stop shopping experience—saw a 3.7% lift.
Conversely, home improvement struggled during the holidays. Spending on building materials and garden equipment fell 1%, suggesting that consumers prioritized gift-giving and personal gadgets over home maintenance. Furniture and home furnishings remained essentially flat, with a modest 0.8% gain.
While the headline 4.2% growth signals strength, real spending growth adjusted for inflation is estimated at roughly 2.2%.
“Consumers are uncertain, cautious, but also smart about how they’re spending their money,” Brown said.
Visa’s data also highlights a disconnect between sentiment and action. According to the CNBC All-America Economic Survey, 41% of Americans planned to spend less this holiday season, six points higher than last year. Rising import prices and years-long inflation remain a significant factor at checkout, yet spending overall remained robust.
AI and Technology’s Role
Experts say AI tools have allowed consumers to maintain spending levels despite economic uncertainty. Shoppers increasingly leverage AI for comparison shopping, deal-finding, and refining product preferences in real-time, allowing them to make smarter choices and optimize their budgets.
Electronics, boosted by high-performance AI-capable devices, exemplify the influence of these technologies on purchasing behavior.
Looking ahead, analysts expect U.S. retail spending to remain supported by continued AI adoption, e-commerce growth, and selective discretionary spending. Wage growth and corporate hiring trends could sustain consumer purchasing power, while interest rate levels set by the Federal Reserve will remain critical. Analysts note that a moderation in inflation, combined with technology-driven efficiencies, may further encourage online and high-tech goods spending.
Given the growing influence of AI in comparison shopping and personalized recommendations, retailers that integrate AI into their platforms are likely to see continued gains. Categories like electronics, apparel, and convenience-focused products are expected to maintain momentum, while sectors like home improvement may face slower growth unless interest rates and consumer confidence improve.
AI is increasingly central to how Americans shop, and it is believed that as we move into 2026, consumers will continue to leverage these tools to make smarter decisions, even in the face of macroeconomic uncertainty. Some analysts believe that the holiday season, so far, has demonstrated that technology can offset some of the pressures from inflation and high costs.
Overall, the 2025 season is believed to have marked the evolving U.S. retail landscape, where AI-driven tools, convenience, and personal tech are shaping consumer behavior.