Mastercard Economic Institute: Holiday spending to rise 5.5% year over year
A new forecast predicts the strongest holiday growth since 2022 — fueled by higher prices.
U.S. retail sales, excluding automobiles and gas, are expected to increase 5.5% year over year between Nov. 1 and Dec. 24, according to Mastercard Economic Institute’s annual holiday forecast. The report, based on SpendingPulse Insights, represents in-store and online spending across all forms of payment.
Solid spending is expected to show up across channels. Online sales are expected to rise 11% year over year and in-store sales by 3.9%. The in-store figure is the more surprising one, noted Mastercard, as it would be the strongest showing for physical retail in four years. The increase suggests that stores are holding their ground even as digital continues to scale, the report states.
Prices, however, figure into the holiday growth. Mastercard estimates about half the growth in spending will be due to higher prices.
Other holiday forecasts have struck a similar note. Bain & Company forecasts 4.5% year-over-year growth, with more than half of the nominal sales growth coming from higher inflation.
Consumers arrive in good shape for the season. A strong job market, which supports wage growth and rising household wealth, has helped sustain solid spending all year. And while higher-income households have likely set the pace, there has been continued spending across income cohorts.
The calendar will also shape the season. Thanksgiving falls late again this year, compressing the window to Christmas and potentially encouraging retailers to begin promotions earlier.
“The bigger change from last year is that Cyber Monday lands in November, concentrating online shopping into one long weekend and making November an especially important month for retailers,” the report states.
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Category to Watch
Electronics could be one of the season’s most closely watched categories, according to the report. Strong demand for memory chips and other components tied to the AI infrastructure buildout has contributed to a 12.2% year-over-year increase in the Personal Consumption Expenditures Price Index for video, audio, photo and information-processing equipment, a notable departure from a category where prices have historically declined.
Mastercard expects consumer electronics and software to deliver outsized growth this holiday season. SpendingPulse insights show spending in the category growing 10.7% year over year so far in 2026.
The complete Mastercard Economic Institute forecast can be found here.
