Consumers enter the 2026 holiday shopping season having continued to defy expectations, buoyed by a healthy labour market and strong wealth gains. Based on SpendingPulse insights, which represent in-store and online spending across all forms of payment, the Mastercard Economics Institute (MEI) expects holiday sales — measured as retail sales excluding petrol & autos between November 1 and December 24 — to increase 5.5% YoY in 2026. The forecast reflects multiple dynamics:

1. Channel performance: While we expect online sales excluding fuel & autos to continue outperforming at 11% YoY growth, we forecast in-store sales growth of 3.6%, its strongest pace since 2022, underscoring the importance of an omnichannel approach for the U.S. consumer.
2. Inflation contribution: As always, prices matter. For retail sales excluding fuel & autos, 2.8pp of the 5.5% growth rate reflects inflation. Nearly half of the gain in holiday spending can be explained by higher prices, similar to last year but for different reasons – a function of higher costs due to elevated energy prices and the AI buildout this year vs. tariff pressure last year. Persistently elevated diesel prices bear watching, given their potential to raise retailers’ transportation costs and exert upward pressure on broader consumer prices into year-end.
3. Calendar effect: Like last year, Thanksgiving will occur relatively late, resulting in a compressed period between Thanksgiving and Christmas and potentially prompting retailers to launch promotions earlier. Unlike last year, Cyber Monday will fall in November, shifting a significant portion of online sales into the month.

The headline tells only the big story — there is a lot under the bonnet of the forecast. Our expectation for holiday spending leans heavily on the trend heading into the season. Consumers kicked off 2026 at a solid pace, carrying momentum from a strong 2025 holiday shopping season, and picked up further in the spring, supported by the labour market rebound and larger-than-normal tax refunds. MEI estimates that tax refunds were 18% above last year, adding an incremental $50 billion to household budgets in aggregate.

Consumers also faced higher prices at the pump, which absorbed a larger share of budgets. Nominal PCE growth averaged 5.8% YoY in H1, 0.3pp above its pace during the same period last year, while real (inflation-adjusted) PCE growth averaged 2.2% YoY, down 0.7pp from a year earlier.

A key question is what role higher-income households play in driving spending. They have been an important contributor to spending growth in recent years, benefiting from rising household wealth that has supported discretionary spending. At the same time, the consumer story remains broader than affluent households. We continue to observe steady spending activity and meaningful contributions across income cohorts, supported by the labor market and wage gains along with overall healthy household balance sheets. In other words, higher-income consumers may be setting a higher pace of spending growth, but consumption remains supported by a broad base of households.

And then there is AI. The retail economy is in the middle of a wave of innovation. For the past few years that has come mainly through the continued expansion of e-commerce, giving consumers more price discovery and more choice. AI tools have accelerated that wave, further empowering consumers. Our analysis below compares spending behaviour between consumers with paid subscriptions to AI services and those without.

AI is also impacting prices as the AI infrastructure buildout boosts consumer electronics pricing. Strong demand for memory chips and other electronic components has contributed to a 12.2% YoY increase in the PCE price index for video, audio, photo, and information processing equipment. This marks a notable departure from the category’s long-term trend, as prices in this category have historically declined. Against this backdrop, we expect consumer electronics and software to deliver outsized nominal sales growth in the festive shopping season, with SpendingPulse’s measure of electronics growing 10.7% YoY thus far in 2026.

Finally, our high-frequency aggregated and anonymised card data offers a view into unique behavioral trends. Spoiler alert: last-minute shoppers are buying more in person, across a narrower set of categories, and spending more per transaction.

The rise of e-commerce has given consumers greater choice and flexibility in how, where and when they spend, while enabling them to both identify and access the best deals globally. As AI diffuses throughout the economy, it is further accelerating these shifts by increasing visibility into products and exposing consumers to a broader set of retailers, including smaller and boutique brands.

MEI analysed aggregated and anonymised transaction data to compare spending patterns between consumers with paid AI subscriptions (“AI power users”) and those without (“non-AI power users”) during the 2025 holiday season. The analysis revealed clear differences in spending patterns by intensity of AI use.

AI power users spread their spending across a broader set of retailers than non-AI power users and are especially active in competitive categories such as beauty services, specialty food stores, florists and restaurants (see chart below). In contrast, differences in retailer dispersion are less pronounced in travel and technology-related categories.

These findings suggest that AI power users are more likely to be optimisation-oriented shoppers, spreading their discretionary spending across a wider range of merchants, including smaller and boutique retailers offering specialised products. AI tools are well positioned to support this behaviour by improving product discovery and comparison.

AI power users spent a larger share of their holiday dollars earlier than non-AI users in 2025. This was especially true before Thanksgiving, when they spent more in planning-focused categories such as travel, clothing and jewellery.

AI power users’ spending patterns differed from those of non-AI power users in several notable ways across the 2025 holiday shopping season. These findings should be read as differences in observed behaviour between the two cohorts, not as evidence that use of AI services is driving those differences.

• The apparel category exhibits one of the clearest examples of spending being pulled forward, with AI power users allocating a greater share of purchases to the period leading up to and including Thanksgiving (see chart below).
• AI power users are more active during Thanksgiving weekend, especially in promotion- and discount-driven categories such as sporting goods, arts and crafts, toys and clothing. This suggests they may be more likely to take advantage of holiday deals and value-focused shopping opportunities.
• From early December through Christmas, AI power users’ spending becomes more concentrated in hospitality, amusement and recreational services, discretionary and gift-related categories. This suggests a transition from promotion-focused shopping to holiday preparation and experience-driven spending.
• While AI power users’ planned purchases tend to skew online before Thanksgiving, the pattern differs in categories such as jewelry and giftware. In these categories, the share of total spending across all channels is more heavily concentrated before Thanksgiving than online spending alone, suggesting that some holiday preparation and gifting purchases continue to take place in physical stores, while a portion of online purchases is deferred until closer to Christmas.

This analysis does not establish that AI services cause these differences in spending patterns, but it does identify behaviors more commonly observed among AI power users. The findings suggest that consumers with high-intensity AI use may lean toward optimization-oriented shopping: planning early, seeking deals and avoiding last-minute purchases. AI may reinforce their tendency to compare options, discover new retailers and time purchases strategically. For retailers, these patterns highlight the value of tailoring promotional strategies and timing to the distinct shopping behaviours emerging across consumer cohorts and industries.

However much we try to avoid it, there is always a final rush to buy gifts. It may be a last-minute party invite, or a long-lost cousin overlooked when the gift list was first drawn up. Whatever the reason, the last-minute Christmas shopping rush creates a distinctive shopping environment — and an opportunity for retailers. Leveraging Mastercard’s aggregated and anonymised card data covering the 2025 holiday season, we observe the following:

1. Available now: Shoppers who wait until the week before Christmas are most likely shopping in person for jewellery, handbags, cosmetics or at department stores. Over 35% of in-store spending on these categories between November 22 and December 25 occurs in that final week. Those who hold out until Christmas Eve typically reach for spirits, handbags, jewellery or video games. And on Christmas Day itself, online spending spikes for video games, digital apps — especially health and fitness — and gift cards.
2. Late fees: Focusing on a subset of gifting-oriented categories — toys, electronics, sporting goods, clothing, department stores, jewellery, leather goods and other accessories — MEI finds that in children’s categories the average transaction value peaks around Black Friday and then trails off as December 25 approaches. In categories popular for premium gifts, such as jewelry, handbags, department stores, cosmetics and perfume, the pattern runs the other way: the average transaction value rises each day from December 15 and peaks on Christmas Eve.
3. The appeal of the mall: As the clock winds down on holiday shopping, consumers increasingly turn to malls. We estimate that more than 6% of annual spending at U.S. shopping malls occurs during the week before Christmas, roughly double the share for comparable gift-oriented retailers in non-mall locations. Inside malls, last-minute shoppers can check more items off their lists without braving the elements. Consistent with that theme, residents of warmer climates are more likely to shop in shops at the last minute, led by Florida, Nevada, and Georgia, while shoppers in Maine, Vermont, and New Hampshire are the least likely to make in-store purchases on Christmas Eve.

The findings align with the laws of supply and demand: as Christmas approaches, consumers face fewer choices and less time and appear willing to accept higher prices to complete their lists. In other words, procrastination carries a premium.

The holiday shopping season is as important to economists as it is to retailers, owing in large part to its sheer scale. Spending trends during these two months can meaningfully shape assessments of consumer and economic momentum, while also informing expectations for the year ahead.

Because holiday spending is concentrated within a relatively short window, it offers a unique lens on how consumers respond to changing economic conditions. That has been especially valuable in recent years, as households navigated a series of shocks and structural shifts — from the pandemic-driven acceleration of e-commerce to supply chain disruptions, tariffs and renewed energy price pressures.

This holiday shopping season is likely to offer fresh insight into how consumers adapt to an increasingly digital and AI-enabled marketplace. Armed with more tools to compare prices, discover products and search globally for value, consumers appear well positioned to navigate the latest bout of economic uncertainty.

As the primary engine of the US economy, the consumer remains the most important story to watch. Few periods offer a clearer window into evolving consumer behaviour than the holiday shopping season.