{"id":23172,"date":"2026-01-30T13:31:02","date_gmt":"2026-01-30T13:31:02","guid":{"rendered":"https:\/\/budgetadirect.com\/?p=23172"},"modified":"2026-01-30T13:31:08","modified_gmt":"2026-01-30T13:31:08","slug":"strong-holiday-spending-masks-a-widening-economic-gap","status":"publish","type":"post","link":"https:\/\/budgetadirect.com\/?p=23172","title":{"rendered":"Strong Holiday Spending Masks A Widening Economic Gap"},"content":{"rendered":"
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Holiday spending came in at the high end of projected ranges for 2025 despite numerous economic challenges.<\/p>\n

According to Mastercard, U.S. retail sales (excluding automotive) increased 3.9% year-over-year from Nov. 1 through Dec. 21, 2025. CNBC and the National Retail Federation published a similar increase, reporting holiday sales grew 4.1% year-over-year through November and December 2025.<\/p>\n

Official government data gathered by the Census Bureau has been delayed due to an ongoing backlog stemming from the partial government shutdown in October and November 2025. It\u2019s now scheduled for release on Feb. 10, about a month later than usual.<\/p>\n

Even without the government data, the Mastercard and CNBC\/NRF figures tell the story of a robust holiday shopping season, with both estimates coming in at the high end of holiday spending forecasts. In November 2025, for example, the NRF predicted that holiday sales would rise between 3.7% and 4.2% year-over-year. Mastercard estimated a 3.6% gain. And Deloitte projected a more modest 2.9% to 3.4% annual increase.<\/p>\n

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@bankrate <\/p>\n

The economy doesn?t feel great, yet Americans still spent big over the holidays. Bankrate?s Ted Rossman explains why.<\/p>\n

\u266c original sound \u2013 Bankrate <\/section>\n<\/blockquote>\n

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I\u2019d be happy to help.<\/em><\/p>\n

So, retail sales came in healthy, but there\u2019s still a lot of economic gloom and doom out there. What do the retail numbers tell us about what\u2019s going on around the kitchen tables across the country? Well, that seems to vary starkly from kitchen to kitchen.<\/p>\n

Holiday spending contradicts gloomy consumer sentiment<\/h2>\n

\u201cDecember Retail Monitor data saw a sharp surge in growth as consumers continued prioritizing holiday spending on family and friends,\u201d NRF President and CEO Matthew Shay said in a release. \u201cContinued economic momentum helped land 2025 holiday sales near the top of NRF\u2019s forecast, reaffirming that consumers remain on solid footing.\u201d<\/p>\n

While I agree that the economy is doing relatively well overall, the key word here is \u201crelatively.\u201d For many people, the economy still doesn\u2019t feel great. And even that that is probably an understatement: The Conference Board reported that consumer confidence fell for a fifth straight month in December, nearing its lowest point in more than a decade. The mood got even worse in January, after the holidays. The inflation rate has declined, but Americans remain on edge over elevated prices. A weakening job market is also weighing on our collective psyche.<\/p>\n

But for every point there seems to be a counterpoint in this conflicted economy. Consumer sentiment has been depressed since the pandemic began in early 2020, yet we haven\u2019t had a recession in nearly six years. The economy is growing (in fact, the most recently reported quarter was the strongest in two years), consumer spending is expanding and the unemployment rate is still low in the grand scheme of things (just not as low as it was a couple years ago). Stocks and home prices have been hitting record highs and air travel is setting records as well.<\/p>\n

The two-track economy keeps widening<\/h2>\n

How do we make sense of all this? The answer lies in the K-shaped economy. Essentially, the rich are getting richer and the poor are getting poorer. Moody\u2019s says the top 10% of earners are accounting for 50% of all spending, an all-time high. Upper-income households are powering the economy forward while the other 90% struggle.<\/p>\n

\n Consumer Edge found that 2025 Black Friday through Cyber Monday spending fell 2.2% year-over-year among the lowest-income households (those earning less than $40,000 per year) while it grew 2.8% among households earning $150,000 or more annually.\n<\/p>\n

Auto loan delinquencies have reached a 15-year high, led by borrowers with lower incomes and lower credit scores, largely because car prices have reached record levels. If you\u2019re a lower-income household, there\u2019s only so much you can cut from your budget. Higher costs for housing, food, transportation and just about everything else have greatly strained this group. Wages haven\u2019t kept pace with rising prices for many, causing them to deplete their savings and take on credit card debt.<\/p>\n

At the same time, the party keeps rocking for higher-income households who are better equipped to weather the rising cost of living; plus, they\u2019re the ones benefiting from record-high stock and home prices. If you locked in a 3% mortgage rate a few years ago and you have a record amount of home equity and a sizable investment portfolio, you\u2019re probably feeling a heck of a lot better than someone whose rent keeps going up and is not benefiting from stock market or home price gains. Roughly 2 in 3 Americans own their homes, and a similar share is invested in stocks.<\/p>\n

What will happen next?<\/h2>\n

A key question moving forward is whether the 2025 holiday spending momentum was a last hurrah or a sign of things to come. We almost always see credit card balances spike in the fourth quarter, around the holidays, and then they decline a bit in Q1 as Americans tackle their New Year\u2019s resolutions to pay down debt. Tax refund money helps, too.<\/p>\n

The trend could be even more pronounced than usual this year, with so many wrestling with the high cost of living. The cumulative effect (prices have risen an average of about 25% over the past five years) is more impactful than the year-over-year inflation rate (around 3%) at this point. This January\u2019s weather has also been nastier than usual across much of the nation, perhaps curtailing or postponing some spending.<\/p>\n

But as we have been repeatedly reminded over the past several years, it\u2019s dangerous to underestimate the strength of the consumer. If you only looked at consumer sentiment figures, you would think we have been in a deep recession since 2020. Other economic data, however, illustrates how consumers are pushing the overall economy up and over this wall of worry. Consumer spending, GDP growth and the job market are continually outpacing sentiment.<\/p>\n

The bottom line<\/strong><\/h2>\n

Yes, people are spending more because things cost more. But many are also spending because they want to, and because they have the capacity to do so. Wage growth has exceeded inflation for a couple of years now.<\/p>\n

As the saying goes, all news is local. But I\u2019m not talking specifically about geography. It\u2019s more about where you fall on the economic spectrum. Like that saying about how it\u2019s a recession if your neighbor loses their job and a depression if you lose yours. The K-shaped economy is widening and some people (the ones doing most of the spending) are doing quite well while others are struggling.<\/p>\n

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