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US holiday spending could exceed $1 trillion, the highest to date, despite tariffs and economic uncertainty, according to the National Retail Federation (NRF).
Retail sales in November and December will rise between 3.7% and 4.2% year on year for a total of $1.01 trillion to $1.02 trillion, the NRF predicted last week. In comparison, year-on-year sales in 2024 increased 4.3% to $976.1 billion.
“American consumers may be cautious in sentiment, yet remain fundamentally strong and continue to drive US economic activity,” said NRF CEO Matthew Shay. “We remain bullish about the holiday shopping season and expect that consumers will continue to seek savings in nonessential categories to be able to spend on gifts for loved ones.”
Retailers are adding extra staff to handle holiday demand, with the NRF anticipating 265,000 to 365,000 seasonal hires amid the slow labor market — down from last year’s 442,000.
A major challenge this year is the federal government shutdown, which is still ongoing as the holiday season approaches. Reduced federal spending will cut into private-sector income, affecting consumer demand, the NRF said. The economic repercussions are likely to be temporary, but the impact will grow the longer the shutdown persists, it added.
Consumers will spend an average of $890 on gifts, food and decorations this holiday, according to a separate study the NRF conducted last month. That’s the second-highest figure since the survey began more than two decades ago. The 2025 Retail Return Landscape report from the NRF and Happy Returns, a UPS company, estimated that consumers would send back goods and services equal to about 16% of annual sales, or $849.9 billion. That’s roughly in line with last year’s 17% returns, which reached $890 billion.
Image: Holiday shoppers. (Shutterstock)
