• U.S. holiday retail sales are forecast to grow 3.6% in 2025, a deceleration from the 4.3% growth seen in 2024, with e-commerce growth also slowing to 6.9% from 8.3%.
  • Consumer confidence has hit a 3.5-year low, with only half of shoppers planning to increase spending, down from 62% a year ago, while 24% intend to cut back.
  • Online channels, led by Amazon, continue to dominate shopping plans, with 71% of consumers expecting to start their holiday purchases before Black Friday despite a longer shopping season.

A new survey from BMO Capital Markets indicates the upcoming holiday season may see a more cautious consumer, with projected sales growth for 2025 slowing from the previous year. The findings point to a fragile economic sentiment among shoppers, driven by persistent inflation and rising unemployment.

According to the survey of 1,000 U.S. consumers, only 50% plan to increase their holiday spending this year, a significant drop from the 62% who said the same last year. A substantial 24% of respondents now plan to reduce their holiday budgets, reflecting the lowest level of consumer confidence in three and a half years. This pullback is expected to translate into a 3.6% increase in total retail sales, down from 4.3% growth in 2024. E-commerce, while still growing faster than in-store sales, is also projected to cool off, rising 6.9% compared to 8.3% last year.

“The data suggests a clear shift in consumer behavior,” said an analyst familiar with the survey results. “Shoppers are becoming more budget-conscious, and this is directly impacting their outlook for discretionary holiday spending.” The analyst noted that while the numbers point to moderation, resilient shoppers could still provide an upside surprise if economic pressures ease.

The digital marketplace remains the primary engine for growth. The survey found that 52% of consumers plan to boost their e-commerce spending, compared to just 44% who intend to spend more in physical stores. Amazon continues to be a dominant force, with a staggering 94% of consumers stating they plan to shop on the platform for their holiday purchases.

In a notable trend, the traditional holiday calendar appears to be stretching. Even with an extra day between Black Friday and Christmas this year, 71% of those surveyed said they plan to begin their shopping before the Black Friday sales event. This points to a more prolonged and strategic approach to gift-buying as consumers hunt for deals and spread out their expenses. Efforts to reach BMO for further comment on the timing dynamics were not immediately successful.

Underlying the cautious spending plans are broader economic concerns. Ongoing tariff impacts are pushing prices higher for many goods, leading over 60% of consumers to adjust their shopping plans, often by seeking out domestically produced gifts or items less affected by import duties. This has resulted in shoppers prioritizing essentials while pulling back on non-essentials like travel, dining out, and holiday decor.

Correction: An earlier version of this article misstated the projected e-commerce growth rate for 2024. It was 8.3%, not 8.5%