US holiday retail sales are expected to be up 3.5% to 4% over last year as consumer spending has remained resilient amid economic challenges, analysts at Wells Fargo believe.
This forecasted growth would be below the long-run annual average of 4.7% and slightly under the 4.3% average over the prior expansion from 2010 to 2019, reflecting expected consumer restraint due to higher prices and tighter budgets.
“Consumers face a range of headwinds this holiday season—from a cooling jobs market and tariff concerns to a broad decline in confidence,” Wells Fargo wrote.
“These challenges may cause consumers to slow their roll, but will ultimately not stop them from getting out and spending this season.”
Tariffs are expected to influence prices for gifts and holiday-related services, the analysts noted.
“Even as the tariff impact has been contained thus far when it comes to overall consumer inflation, gifts are likely to cost more this year,” they wrote.
They pointed to higher costs for personal care services, travel, and event tickets, which may constrain spending on traditional gifts.
“Higher prices mean gift certificates may be an ‘it’ gift this year, particularly for budget-conscious consumers looking to stick to a specific dollar amount,” they wrote.
“This could be another headwind to holiday sales, but it would also come with a boost to sales in early 2026 as gift cards get marked as purchases at time of redemption.”
Wells Fargo pointed out that many households accelerated purchases of discretionary goods earlier this year out of fear of rising prices, a trend that aligns with the ongoing shift toward online shopping. “Spending more earlier means potentially less to be spent later this year,” the firm wrote.
While wages remain weaker than in past years, most of the working-age population continues to receive paychecks. Wells Fargo wrote that this means “households may therefore increasingly turn back to the credit card or non-traditional forms of borrowing like buy-now, pay-later services to spend.”
Despite these headwinds, Wells Fargo said the underlying consumer behavior remains resilient.
“Persistent pessimism since the pandemic despite resilient spending suggests households may continue to splurge in search of comfort and a sense of normalcy around the holidays,” they wrote.
“Have you heard of retail therapy? The continued uneasiness that households are reporting may be the very thing that supports spending this year.”
Wells Fargo also cautioned that the federal government shutdown has limited access to September retail data, and the firm plans to refine its forecast as more data becomes available.
By the firm’s measure, holiday sales exclude spending at auto and parts dealers, gasoline stations, and bars and restaurants, focusing on retail spending tied to gifts and holiday activity.