Consumers remain the bright spot heading into the holidays

Retailer bottom line: The National Retail Federation expects holiday sales to grow 4.2% in 2026 as consumers continue to prioritize the season. While most consumer segments have shown strong spending momentum this year, it's likely that higher-income households will do more of the heavy lifting this holiday season. 

The holiday season has always held a special place in consumers’ budgets, and this year should be no exception. The National Retail Federation forecasts retail sales during November and December 2026 will grow 4.2% over 2025, reaching $1.013 trillion. This represents an acceleration from 2025, when holiday sales increased 3.1% to $972 billion. 

The forecast reflects the continued resilience of the American consumer. Almost 80% of total GDP growth over the last four quarters has been driven by consumer spending. NRF’s September Retail Monitor showed 12 consecutive months of retail sales growth, providing strong momentum as we enter the most important shopping period of the year. Consumers continue to prioritize spending on family, friends and loved ones, even as they navigate financial pressures. 

Higher prices place greater pressure on lower-income households 

Higher food and gasoline prices are expected to place greater pressure on moderate- and lower-income consumers during the 2026 holiday season, while rising financial wealth continues to support spending among higher-income households. The benefits of excess tax refunds offset higher gasoline costs during the first eight months of the year, but that support has worn off. The longer that gas prices remain elevated, the more pronounced the impact will become for households at the lower end of the income spectrum. 

The National Retail Federation expects core goods inflation, as measured by the Personal Consumption Expenditures price index, to average 2.5% in 2026, up from 1.6% in 2025. Higher diesel prices are increasing shipping costs, while AI investment continues to exert upward pressures on a range of categories, particularly electronics. Even so, about half of NRF’s projected holiday growth is expected to come from real consumer spending rather than price increases. We expect retailers to work hard to keep prices low via a range of promotions and discounts. 

How are consumers adjusting their 2026 holiday shopping plans? 

Consumers are no strangers to economic headwinds, and they are adjusting their holiday shopping strategies rather than stepping away from the season. More than half of holiday shoppers (56%) say the state of the economy will affect their spending plans this year, according to the National Retail Federation's October Holiday Consumer Survey conducted by Prosper Insights & Analytics. Among these consumers, 43% plan to shop for sales more often, 31% will comparison shop online more often and 29% will use coupons more often. 

Retail sales events will play an important role. The NRF October Holiday Consumer Survey found 64% of consumers say they are likely to wait until Thanksgiving weekend sales to do most of their holiday shopping. Others are starting earlier: 43% plan to begin before November, with spreading out their budgets cited as the leading reason. 

Consumer confidence remains weak, but confidence remains a poor predictor of actual spending. Real disposable income, labor market health and household wealth provide a better guide. Together, those fundamentals point to continued holiday growth, even as consumers remain deliberate, value-conscious and mindful of their budgets. To keep up with NRF’s reporting on the holiday season, visit NRF’s winter holiday headquarters.