Americans are giving their debit and credit cards a harder workout this year.
The report also states that seasonally adjusted spending increased by 0.3 percent month over month, representing the fifth consecutive month of gains.
Although holiday shopping rose by 5.7 percent year over year through October, the BOA report indicates that consumers may be paying more for less, as retail transaction volumes have declined since January.
However, the BOA expects holiday spending to pick up in November and December. Typically, more than 20 percent of purchases, including electronics, clothing, and jewelry, are made during this time of year.
“Spending could have been even higher without the government shutdown and Nor’easters,” the report states. “The strength in October spending came despite the potential impact of the government shutdown and some weather events in the Northeast.”
As a result of the government shutdown, spending in the Washington metro area lagged behind that of the rest of the country. The federal government accounts for almost 19 percent of all employment in that region.
In addition, the report shows that spending also slowed in other East Coast cities, which it attributes to two nor’easters in October.
According to the findings, spending on services, including restaurants, represented more than 50 percent of overall growth, while retail spending, excluding restaurants and gas, made up about 25 percent of growth.
The report also suggests that tariffs could be responsible for some retail price increases.
“After ‘Liberation Day’ in early April, average spending per transaction on electronics grew significantly, jumping nearly 7.5 percent in a month,” the report states, naming electronics and other tech-related sales items.
However, it notes that in mid-April, when many tariff exceptions were granted for the electronics category, the average amount spent per transaction dropped by almost 9 percentage points.
Households earning higher incomes increased spending by 2.7 percent in October, while spending in middle- and lower-income households grew by just 1.6 percent and 0.7 percent, respectively.
In BOA’s 2025 Holiday Survey, 62 percent of respondents of all income levels reported feeling financial strains this season. Almost 58 percent noted that holiday gifts feel more expensive this year, blaming inflation, tariffs, and companies prioritizing profits.
Black Friday remains the most popular time for holiday shopping, with 25 percent of BOA respondents reporting that they will shop during this annual sale period.
An overwhelming 87 percent of all consumers say they plan to shop at discount retailers and 54 percent plan to purchase from wholesalers, a big increase from the 39 percent recorded in 2024. Others responded that they will use reward points or buy fewer gifts for fewer people.
