Key Takeaways

• Consumer spending accelerated in September, rising 0.8%, double the expected increase.

• Retailers expect consumers to spend $1 trillion this holiday season, up 4.2% from 2025.

• Consumer spending has remained resilient despite inflation-adjusted incomes falling over the last six months due to high inflation.

Americans have found room in their budgets to keep on spending despite soaring fuel prices, and retailers expect them to ramp up their purchases at least through the holidays.

That’s according to a pair of reports on consumer spending released Thursday, both of which highlighted the continued resilience of U.S. consumers as inflation eats away at household budgets. Retail sales rose 0.8% in September from August, down from a 1.3% monthly increase in August, the Census Bureau said. That was more than double what forecasters had anticipated, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.

A second report from the National Retail Federation predicted U.S. consumers will spend $1 trillion at retailers in November and December, up 4.2% from 2025.

What This Means For The Economy

Healthy consumer spending is vital for the economy, since it makes up 68% of the GDP.

“This year’s forecast reflects our confidence that consumers will prioritize the holiday season even as they remain mindful of their budgets,” NRF CEO Matthew Shay said in a statement.

The data highlighted the willingness and ability of U.S. consumers to continue spending despite household budgets being pinched by high inflation, the byproduct of tariffs, the Iran war spiking fuel prices, and the AI spending boom. For the last six months, inflation has outpaced pay raises, diminishing the buying power of typical paychecks.

Much of the September spike in retail sales was due to rising gas prices, according to Census Bureau data. But even setting aside gas stations, spending rose at online stores, restaurants and grocery stores, among others, making for increases in eight of the 13 categories outside gas and autos.

The overall health of consumer spending doesn’t mean everyone is holding up under financial pressure. Separate data suggests much of the spending is being propped up by the wealthiest households, who are flourishing thanks to the booming stock market. And other data indicate people are cutting back on their savings.

“The average consumer may still be spending, but they’re also treading water as prices rise,” Jim Baird, chief investment officer with Plante Moran Financial Advisors, wrote in a commentary. “There’s much less room for discretionary spending for individuals living paycheck to paycheck.”

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