Americans to spend big this holiday despite gloomy economic views

Americans are expected to open their wallets this holiday season, increasing their gift budgets even as a slowing job market and stubborn inflation weigh on consumer confidence, according to a new analysis from Visa Business and Economic Insights.

U.S. consumers are forecast to spend an average of $736 each on holiday gifts, a 10% increase from the $669 reported last year, Visa said in its 2025 holiday spending outlook.

Inflation partly explains this year’s projected sales growth, with the Consumer Price Index showing that prices rose 3% on an annual basis in September. But Americans are also planning on upping their gifting, especially older consumers, with baby boomers forecasted to boost their holiday spending by 21%, the study found.

The robust spending outlook highlights consumers’ resilience, even as confidence surveys paint a more cautious picture.

“We are clearly seeing consumers spend in a far better, more robust way than what we’re seeing in the consumer sentiment and confidence data,” Michael Brown, a principal U.S. economist at Visa, told CBS News.

Visa tapped retail sales data from the U.S. Department of Commerce — excluding automobiles, gas stations and restaurants — for its holiday spending projections.

In the years leading up to the pandemic, changes in consumer spending corresponded more closely with consumer sentiment, Visa’s analysis shows. But that link has weakened in recent years. In April, for example, when consumer confidence fell to its lowest level since the pandemic, real consumer spending increased 3.1% on an annual basis, the Visa report points out.

Consumers continue to express dour views about the economy, with sentiment falling for a third consecutive month in October due to worries about a weaker job market and rising inflation, according to the latest University of Michigan sentiment index. Another measure from the Conference Board, a nonprofit group, also shows confidence in the economy edged down slightly this month.

What explains the disconnect? Steady wage gains have kept spending aloft, with many Americans continuing to shop despite higher prices because their take-home pay remains solid, Brown said.

Other holiday outlook forecasts from groups like Abode for Business and polling firm Gallup point to the same conclusion as Visa’s: Americans are planning to dish out billions on holiday gifts, travel and food despite their gloomy views on the economy.

Still, some are exercising caution in their purchasing, Brown said, noting that low- and middle-income households will face the biggest tradeoffs this holiday season. Higher costs for essentials such as groceries are leaving them with less room for discretionary spending, he added.