Holiday shoppers trade up — and down
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Illustration: Aïda Amer/Axios
This year's holiday season will spotlight America's growing economic divide.
Why it matters: Bank of America's and Visa's holiday spending reports show wealthier households are driving retail growth, while lower- and middle-income consumers are stretching to keep up.
- The result: Spending looks strong on the surface, but underneath it's driven by inequality and inflation-fueled gains.
The big picture: Americans are still spending — but not equally.
- Bank of America calls it a "tale of two wallets." Card data shows total household spending up 2% year over year in September, marking the strongest pace since late 2024.
- But lower-income consumers are falling behind: Their spending grew just 0.6%, compared to 2.6% for higher-income households, as wage gains lag inflation.
- "It's really millennials and Gen X where spending has been softer — perhaps the kids will have to look to their grandparents more than their millennial parents for their presents this year," Bank of America Institute senior economist David Tinsley said during a media roundtable Thursday.
Visa's annual holiday forecast, out Friday, echoes that uneven picture. It projects a 4.6% rise in total retail sales for the 2025 holiday season — but notes that inflation accounts for much of the growth.
- Adjusted for prices, real spending will rise just 2.2%, suggesting shoppers are paying more, not necessarily buying much more.
By the numbers: 87% of consumers plan to shop at discount retailers this season, according to Bank of America.
- Wholesale clubs and big-box stores like Costco, Walmart and Target are seeing the biggest jump in popularity, with a 15-point increase in the percentage of shoppers planning to buy there versus last year.
- Dollar stores gained nine percentage points in shopper interest, while outlet malls and e-commerce platforms lost share amid tariffs and shipping costs.
The bottom line: Boomers and upper-income households are keeping tills ringing, while younger and lower-income shoppers hunt for bargains and stretch rewards points.
