Consumers turned out in record numbers for the five-day Thanksgiving holiday shopping weekend, with many focusing on finding the best possible discounts and promotions, as tariffs have stretched family budgets.
According to data released on December 2 by the National Retail Federation, nearly 203 million consumers shopped during the Thanksgiving holiday weekend that stretched to Cyber Monday, marking a 3% increase from 2024, and besting the previous record by 1.3%. That was helped by more than half of consumers taking advantage of early sales and promotions, as the average holiday gift budget tightened from $641 in 2024 to $628 this year.
"Consumers indicated that their purchases were specifically driven by sales and promotions, and many said free shipping, limited-time sales or promotions helped convince them to make a purchase they were initially hesitant about," said Prosper Insights & Analytics executive VP Phil Rist during the NRF's briefing on the holiday weekend shopping numbers.
The ways that shoppers are paying for holiday gifts is further demonstrating just how budget-conscious families have become, with Adobe Digital Insights tracking a 4.2% year-over-year increase in the use of "buy-now/pay-later" (BNPL) credit services on Cyber Monday. Adobe also projects BNPL spending to hit $20.2 billion between November 1 and December 31, which would represent an 11% increase over that same period in 2024, and set a new high water mark for BNPL usage during the holiday shopping season. Additionally, outstanding credit card balances rose to an all-time high of $1.23 trillion in the third quarter of 2025, marking a 6% increase from that same quarter last year.
Although larger retailers reported strong numbers over Thanksgiving weekend, it's been a different story for small business owners. A survey of more than 1,000 small businesses from the Small Business for America's Future nonprofit found that 71% of respondents expect tariffs to have a negative impact on consumer spending this holiday season, while nearly 70% report that their customers have less money to spend this season compared to last year. According to the Tax Foundation think tank, tariffs have also raised overall retail prices by nearly 5% compared to pre-tariff trends, while Goldman Sachs estimates that consumers have shoulders roughly 37% of the burden, Fox Business reports.
This comes as the discrepancy in spending between high-income and low-income households has widened in the wake of chaotic economic conditions. Data from real estate and investment management company JLL found that, while households earning over $150,000 are increasing their planned holiday spending by 26% this year, households under $50,000 are cutting their holiday spending back by nearly a quarter. The result has been a holiday shopping season where spending patterns have revealed a "deeply divided consumer landscape," said JLL retail research manager Keisha Virtue.
Walmart CFO John Rainey echoed that sentiment while speaking at a Morgan Stanley conference on December 2, noting that the disparity in wage growth between upper, middle and lower class households is as large as it's been in almost a decade. That's indicative of the larger "K-shaped" economy that has taken shape in the U.S. in recent months, where higher-income households have continued to show relative resilience in discretionary spending, while lower-income households have faced tighter budgets with slower income growth.
"We see that wallets have been stretched, and more money is being spent on necessities versus discretionary items," Rainey said.
This has had retailers adjusting their strategies to navigate the uneven landscape, with many national chains leaning more on aggressive discounting to chase the fewer dollars being spent by lower-income shoppers. And while these tactics helped create a surge in Thanksgiving weekend traffic, they also reflect a broader shift in retail economics, where businesses have become increasingly dependent on promotions to draw in customers who are hunting for bargains more fiercely than ever.
Despite that, the NRF remains optimistic in its outlook for the remainder of the holiday season, with the group projecting total retail spending between November 1 and December 31 to surpass $1 trillion for the first time ever, and increase by as much as 4.2% from 2024.
"This year’s record turnout reflects a highly engaged consumer who is focused on value, responds to compelling promotions, and seizes upon the opportunity to make the winter holidays special and meaningful," said NRF president and CEO Matthew Shay.
