Holiday Spending to Grow at Fastest Pace Since 2022, Mastercard Says

Holiday retail sales are on track for their strongest growth in four years. The Mastercard Economics Institute forecasts U.S. retail sales, excluding autos and gasoline, will rise 5.5 percent year over year between Nov. 1 and Dec. 24.

Online sales are expected to grow 11 percent, while in-store sales are forecast to rise 3.6 percent, which would be the strongest showing for physical retail in four years. The figures come from Mastercard SpendingPulse, which tracks spending across all payment types.

About half of the projected growth is higher prices rather than more shopping. The institute estimates 2.8 percentage points of the 5.5 percent gain reflects inflation, driven this year by elevated energy costs and demand tied to the AI buildout.

The calendar is compressing the season. Thanksgiving falls late again this year, shortening the window to Christmas and likely pushing retailers to start promotions earlier. Cyber Monday lands in November this time, concentrating online spending into one long weekend.

Artificial intelligence is reshaping how people shop. Mastercard compared spending by consumers with paid AI subscriptions against those without and found the AI users more agile deal hunters. Michelle Meyer, the institute’s chief economist, described these shoppers as “a lot more nimble” on CNBC’s Squawk on the Street.

Consumers enter the season in decent shape, supported by employment, wage growth and rising household wealth. Higher-income households have set the pace, but spending has continued across income groups.

For Philadelphia retailers, the forecast is a green light with a warning label. Shoppers will spend, but they will hunt for value, and the stores that open their promotions earliest may capture the compressed season.