- Despite inflation and financial instability, American consumers are projected to spend more than ever in late 2025, with average holiday budgets exceeding $1,000 per person—a 4% increase from 2024.
- Affluent households drive spending growth due to strong investment returns and wage growth, while lower-income families struggle with stagnant wages and rising costs for essentials like food, housing and energy.
- Though inflation has cooled since its 2022 peak, prices for groceries, rent, utilities and fuel remain significantly higher than pre-pandemic levels, disproportionately impacting middle- and lower-income earners.
- Luxury brands thrive, while discount chains and major retailers like Walmart and Target expand buy-now-pay-later options to cater to cash-strapped shoppers. E-commerce giants (e.g., Amazon) push early Black Friday deals.
- Credit card debt has surpassed $1 trillion nationwide, raising concerns about financial strain in 2026 if interest rates stay high, highlighting the stark contrast between record spending and worsening inequality.
As the holiday season kicks off with Thanksgiving, American consumers are projected to spend more than ever, despite mounting economic concerns. According to the National Retail Federation (NRF), the average per-person holiday budget for late 2025 is expected to surpass $1,000, marking a 4% increase from 2024. However, behind these headline-grabbing figures lies a stark divide: affluent households continue to splurge while lower-income families grapple with stagnant or shrinking budgets amid persistent inflation and financial instability.
The NRF's data reveals a broader trend of rising consumer spending across seasonal events—from Halloween (up 10%) to Mother’s Day and Valentine’s Day (each up 2%). Yet these averages obscure deepening disparities. Wealthier Americans, buoyed by strong investment returns and wage growth in high-paying sectors, are driving much of the increase. Meanwhile, middle- and lower-income households face tighter budgets due to elevated food, housing, and energy costs.
The Federal Reserve's September outlook reinforced caution, maintaining its 2025 inflation forecast at 3%, signaling ongoing concerns about price pressures and labor market volatility.
"The economy is sending mixed signals," says economist Mark Johnson. "While GDP growth remains steady, many families aren't feeling the benefits."
Despite modest cooling in inflation since its 2022 peak, essentials like groceries, rent and utilities remain significantly more expensive than pre-pandemic levels. Gasoline and diesel prices, though down from recent highs, are still up 38% compared to pre-2020 averages—far outpacing the 8% rise in public transit fares cited in some urban cost-saving recommendations.
For lower-wage workers, stagnant incomes exacerbate the strain.
"I used to budget $800 for gifts—this year, it's closer to $500," says Maria Lopez, a retail employee in Chicago. "Everything costs more, but my paycheck hasn’t changed."
Retailers brace for a polarized season
Major retailers are adapting to this bifurcated spending landscape. Luxury brands report strong demand, while discount chains emphasize promotions and layaway programs. Walmart and Target have expanded buy-now-pay-later options, anticipating cash-strapped shoppers.
Online sales are also expected to climb, with e-commerce giants like Amazon offering early Black Friday deals. Yet analysts warn that rising credit card debt could spell trouble in 2026 if interest rates remain high. According to BrightU.AI's Enoch, it has now exceeded $1 trillion nationwide. As of June, Americans collectively owe roughly $887 billion in credit card debt, marking a 13% increase from the previous year—the largest annual jump in two decades.
This holiday season encapsulates the contradictions of the current U.S. economy: record spending alongside deepening inequality. While some households celebrate with lavish purchases, others are cutting back, prioritizing necessities over gifts. As the Federal Reserve walks a tightrope between inflation control and economic growth, the divide between America's haves and have-nots grows ever more pronounced—a reality no amount of holiday cheer can mask.
Watch the video below that talks about Americans living paycheck to paycheck in 2025.
This video is from the Hal Graves channel on Brighteon.com.
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