Visa Economist on Consumer Spending: Holiday Sales, Bifurcation, and 2026 Outlook

Holiday Shopping Resilience

• 🛍️ Despite softer consumer sentiment, retail sales increased by 4.2% year-over-year during the holiday season.
• 💡 Even after adjusting for inflation, spending on holiday goods saw a 2.2% increase.
• 🧠 The resilience of consumers was a significant surprise, holding up spending despite economic concerns.

Consumer Spending Bifurcation

• 📊 A significant bifurcation in consumer spending is occurring across the income spectrum.
• 📈 While the bottom 25% of income earners are seeing positive wage growth, it's considerably slower than a year ago.
• 💸 This divergence in income is leading to different spend behaviors across various income levels.

Industry and Spending Trends

• ✈️ There's a continued pivot towards services and experiences over goods, a trend prominent among younger consumers.
• 💳 This shift is reflected in increased interest in travel and the gifting of gift cards to facilitate service spending.

2026 Economic Outlook

• 💰 Larger tax refunds early in the year are expected to boost consumption.
• 📉 Modest inflation and anticipated Federal Reserve rate cuts are projected to support consumer spending growth throughout the year.
• 📈 Real consumer spending growth is estimated to be around 2.8% year-on-year for the upcoming year, a slight increase from the previous year's 2.6%.