The Trillion-Dollar Season, and Who Finances It
The holiday forecasts are in, and the headline number is a big one: retail sales for November and December are projected to pass $1 trillion. The more useful question for households is not how much will be spent, but how it will be paid for.
The forecast
The National Retail Federation (NRF) expects holiday sales to grow 4.2% this year to about $1.013 trillion, up from about $972 billion in 2025, when growth came in at 3.1% after Census revisions. Mastercard’s projection is a little higher, at 5.5% growth, with online sales rising about 11%. None of these figures is adjusted for inflation, so part of the growth is simply higher prices.
The mood behind the number matters as much as the number. In NRF’s consumer survey, 56% of shoppers said the economy will affect their holiday spending plans. AP’s coverage of the forecast described shoppers who are trading down to cheaper brands and stores, starting earlier, and leaning more on credit cards and buy now, pay later (BNPL) plans. Higher-income households are expected to drive much of the spending.
That is the pattern this memo is about: confident aggregate spending alongside households that say they feel squeezed. The gap between the two has to be financed somehow.
Where the gap goes: credit
Adobe forecasts that BNPL will account for a record $21.3 billion of online holiday spending, up 6.6% from last year, or about $1.3 billion more than in 2025. A LendingTree survey, as compiled by Walnut Invest, found that 37% of consumers took on holiday debt in the 2025 season, averaging $1,223, and that 63% expected it to take three months or longer to pay off. Treat that survey as indicative. It is self-reported, and I have only seen it through a secondary source.
The New York Fed’s household debt data shows the same rhythm at the national level. Card balances jump in the holiday quarter and then fall back, but they do not fall back all the way.
The Q2 2026 total is $54 billion higher than a year earlier, and total household debt reached $18.77 trillion. A seasonal spike that is only partly repaid each year is how a revolving balance quietly becomes a permanent one. With card interest rates averaging 22.15% on accounts that are charged interest, and the Federal Reserve having raised rates in September (both figures are covered in MM-2026-002), a December balance that rolls into the new year is expensive.
What the delinquency data does and does not say
The New York Fed’s Q2 2026 report shows 6.97% of card balances flowing into serious delinquency (90 days or more, annualized), essentially flat from 6.93% a year earlier. A separate New York Fed analysis notes that the share of all card balances that are 90 or more days delinquent climbed from 7.6% to 12.8% between the third quarter of 2022 and the first quarter of 2026, and that different measures of card delinquency have diverged. As MM-2026-002 explains, that larger figure mostly reflects old charged-off debt that stays in the total, while new delinquencies have been stable.
That distinction is important for anyone writing or reading about consumer credit this season. “Delinquencies are flat” and “delinquencies are at post-recession highs” can both be defended, depending on the measure. Neither one tells you whether the household in front of you is comfortable. My read in MM-2026-002 is that consumer credit stress is real but concentrated among lower-credit borrowers, with roughly even odds that the next major U.S. financial crisis starts in unsecured consumer credit. This memo does not change that judgment. It is a reminder of where the household-level behavior behind the aggregates comes from.
The link to performative consumption
In Performative Consumption (MM-2026-001), I looked at how spending driven by visibility, whether hauls, seasonal setups, or gift-giving that is performed as much as it is given, gets financed with credit the household may not be able to carry. The holiday season is the clearest annual test of that argument. It combines social pressure to spend, early discounting, and one-click installment plans that make a purchase feel smaller than it is. Adobe’s forecast of discounts deepening from about 14% in early November to about 30% in Cyber Week is a reminder of how much of the season is built to pull purchases forward.
What we don’t know
Forecasts are forecasts, and the NRF figure in particular is a model-based projection that will be revised. Adobe’s BNPL number covers online spending only. The holiday debt survey is self-reported. And nothing in the national data tells us how much of any card balance is gifts, how much is groceries and gas, and how much is display. The honest conclusion is that the season looks strong in total and that the financing behind it deserves more attention than the headline gets.
A framework for the season
This is general information, not personal financial advice. Three questions are worth asking before any holiday purchase is financed.
- Is the payoff date shorter than the memory of the purchase? If an installment plan or card balance will outlast the gift’s novelty, the true cost is higher than the price tag.
- Is the total of all active installment plans known? BNPL balances are often spread across several providers and are easy to lose track of. Make a single list of every open plan and its due dates.
- Is the spending for the recipient or for the audience? Spending that is meant to be seen is the category most likely to be repeated, escalated, and financed.
A budget set before the first discount email arrives will do more than willpower in December. For the longer list of ways to push back on display-driven spending, see Are You Shopping for the Feed?
What to watch next
The New York Fed’s next quarterly household debt report will show how much of this season’s borrowing lands in the fourth-quarter numbers, and the first-quarter report will show how much of it is repaid. The figures in this memo run through the second quarter of 2026. The gap between the holiday jump and the January decline is the number to watch.
Sources
The research papers, MM-2026-001 and MM-2026-002, have complete reference lists. Key sources for this memo:
- National Retail Federation, 2026 holiday forecast and consumer survey (October 2026), and AP coverage of the forecast (October 15, 2026)
- Mastercard, 2026 holiday shopping forecast, as reported in national coverage (October 2026)
- Adobe Digital Insights, 2026 holiday shopping forecast
- Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit, Q2 2026 (August 11, 2026)
- Federal Reserve Bank of New York, Liberty Street Economics, “How Distressed Are Consumers? Reconciling Diverging Credit Card Delinquency Measures” (August 11, 2026), and the Q4 2025 and Q1 2026 household debt reports as summarized there and in national press
- LendingTree holiday debt survey, as compiled by Walnut Invest
Cite this article
For information and education only. Not investment, tax, or legal advice.