NEW YORK (AP) — Consumers stepped up gift giving during the first seven weeks of the holiday shopping season, according to new data released Tuesday. But uncertainty about the economy is making shoppers more targeted in their buying.
From Nov. 1 through Sunday, cash and credit card sales rose 4.2%, which is less than the 4.8% increase during the same period a year ago, according to Visa’s Consulting & Analytics division.
The data, which exclude sales from auto dealerships, gas stations, and restaurants, are not adjusted for inflation or the impact from President Donald Trump’s tariffs.
When adjusted for inflation, retail sales rose a more modest 2.2% for the first seven weeks of the holiday period, according to Visa’s U.S. principal economist Michael Brown. That compares with the inflation adjusted 3% in the same year-ago time frame.
An average holiday season
“It’s certainly not a spectacular season,” Brown told The Associated Press. “It’s sort of an average holiday season given concerns about macro economic growth, inflation. There’s still a lot of uncertainty among the consumer population.”
Mastercard SpendingPulse, which also tracks cash and credit card spending, said that sales rose 3.9% from Nov. 1 through Sunday. That’s above its 3.6% forecast for the overall season, but also lower than last year’s 4.1% increase during the same period.
Shoppers “blended online and in-store shopping to find the best deals and maximize convenience,” said Michelle Meyer, chief economist at Mastercard Economics Institute.
The figure, not adjusted for inflation, excludes sales from automotive dealerships and gas stations, but includes business from restaurants. Mastercard SpendingPulse didn’t have an inflation-adjusted figure available.
A focused shopper
Retailers say customers are being selective and focused this year on gifts while holding off on the usual holiday decor spending. Many households are struggling with higher prices for groceries, rent and imported goods hit by tariffs. The latest job report, released by the Labor Department last week, also shows a souring employment picture.
As a result, consumers have been more gloomy. Consumers’ confidence in the economy fell in December, marking the fifth straight monthly decline as Americans grew anxious about high prices and the impact of Trump’s sweeping tariffs, according to the latest reading from The Conference Board.
Even with those anxieties, shoppers remain resilient. When all the numbers are in, Visa expects holiday sales data will be more or less in line with its prediction of a 4.6% sales increase between November and December.
Several of the holiday season’s busiest shopping days are still ahead, including the day after Christmas and first Saturday after the holiday, according to Sensormatic, which tracks retail foot traffic.
RetailNext, which measures real-time foot traffic in physical stores, noted there was a 5.4% decline in customer traffic on Saturday compared with last year. So-called “Super Saturday” typically competes with Black Friday as the busiest shopping day of the season. The drop suggests that Americans are spreading their trips across the final weeks before Christmas and are sticking to shopping lists, according to Joe Shasteen, global manager, advanced analytics at RetailNext.
Still, the overall data from Visa and Mastercard are in line with the forecast from the National Retail Federation, the nation’s largest retail industry trade group. It expects sales over November and December of between $1.01 trillion and $1.02 trillion. That would be up 3.7% to 4.2% over last year.
Figuring out consumer behavior this season has been challenging after a 43-day federal government shutdown interrupted the publication of U.S. economic data, including retail sales.
The Commerce Department reported last week that sales at U.S. retailers and restaurants were unchanged in October from September, dragged down by electric car sales after the Trump administration allowed government subsidies for those vehicles to expire.
According to Visa, e-commerce sales rose 7.8% for the first seven weeks of the period, fueled by promotions that started early in the season.
Shopping in stores is still dominant, with 73% of holiday payment volume being driven by in-store sales, and 27% taking place online, Visa said.
Still, online sales surged 7.4%, according to Mastercard SpendingPulse, compared with a 2.9% increase in stores.
General merchandise stores, defined by big discounters like Target and Walmart that sell all types of merchandise, rose 3.7%, Visa said. Electronics emerged as the hottest category, with sales rising 5.8% during this time frame, fueled in part by devices powered by artificial intelligence, Visa said.
Tariffs impact buying
Tariffs played a key role in how shoppers behaved, Brown said.
Clothing and accessories sales accelerated at a 5.3% pace from Nov. 1 through Dec. 21 from a 4.1% increase last year as the category wasn’t as affected by tariffs as other areas like holiday home decor, predominantly made in China, Brown said. That category saw a slim 0.8% sales gain.
And a still weak housing market hurt sales of home improvement items like building materials and garden accessories, which recorded a 1% sales increase, Visa said.
Mastercard SpendingPulse also reported that spending on clothing was strong — up 7.8% for the first seven weeks of the season compared with a year ago, helped by chilly temperatures and seasonal deals.
Restaurant spending increased 5.2% from Nov. 1 through Dec. 21, suggesting that Americans are spending on experiences like a night out, Mastercard SpendingPulse said.
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