Morgan Stanley
Research

U.S. Consumers Feel a Holiday Glow

Dec 17, 2025

Holiday spending stays strong despite inflation, as consumers seek discounts, shift budgets online and embrace AI tools.

Key Takeaways

  • U.S. holiday shoppers are still spending despite inflation concerns.
  • Promotions remain a priority for consumers, as only 25% plan to buy gifts without discounts, and many intend to spread shopping throughout the season.
  • Luxury goods face muted demand, while air travel remains resilient.
  • Online shopping is set to account for half of holiday spending, with 2 in 5 shoppers using AI in the process. 

With the holiday season in full swing, U.S. consumers are flocking to stores – digital and otherwise  – eager to take advantage of seasonal discounts. Despite concerns about inflation, sentiment has improved, with shoppers signaling stronger spending intentions.

 

According to a Morgan Stanley AlphaWise survey conducted in November 2025, 33% of consumers plan to increase their holiday budgets, up from 30% the same survey in the prior month. Meanwhile, the proportion of those expecting to reduce their spending fell to 21% from 23%.

 

Source: AlphaWise, Morgan Stanley Research

 

“The strength is being driven primarily by upper- and middle-income households, as high prices and a decrease in wages weigh on lower-income households,” says Michelle Weaver, Morgan Stanley's U.S. Thematic and Equity Strategist.

 

Across all income levels, consumers expect holiday items to be more expensive this year. As a result, most consumers are spacing their holiday shopping throughout the season instead of buying them all at once.

 

Much like last year, Americans are actively seeking out special offers. However, nearly 40% of Black Friday shoppers were disappointed, saying that 2024 promotions were better. Overall, 63% of respondents said they made purchases during the Black Friday to Cyber Monday period, a 9% decline compared to the same survey last year.

 

Here’s a closer look at some of this season’s consumer trends:

 

1.       Luxury Goods Face a Soft Season

Nearly 30% of consumers plan to opt for less expensive gifts this year, putting pressure on categories, such as luxury and mid-luxury goods, sports equipment and home products. Luxury goods have faced muted growth the past two years and this holiday season is no exception. By contrast, apparel, beauty, toys and home appliances are bright spots.

 

2.       Growing E-Commerce  

Consumers plan to spend half of their holiday budgets online this year. The adoption of AI technology—such as agentic shoppers—has changed the way many online users make purchases and could be part of the reason for the increasing online holiday spending.

 

“About two in five holiday shoppers are using AI tools and features to help with their shopping,” says Weaver. 

 

3.       Flying  Home for the Holidays

Air travel demand remains resilient, and this will be a very strong holiday season for the industry, with passengers buying trips for the next year, says Ravi Shanker, who covers the North American transportation industry at Morgan Stanley.

 

“We remain encouraged by the survey results as travel continues to be a priority among consumers, especially among high-income groups” says Shanker. “Any slight change in travel intentions is aligned with the winter months when leisure travel typically decelerates.”