Visa says holiday spending rose 4.2% thanks to artificial intelligence, technology and the growth of apparel

US consumers showed resilience this holiday season, increasing retail spending 4.2% year over year, according to preliminary data released Tuesday by Visa.

The report from Visa Consulting and Analytics noted that despite persistent economic headwinds, shoppers are still spending, especially on technology and personal goods.

The results tracked payments activity over a seven-week period beginning on November 1 using a subset of Visa’s U.S. payments network data and covering core retail categories, excluding spending on cars, gasoline and restaurants. The numbers also have not been adjusted for inflation.

In-store shopping represented the largest portion of holiday spending, accounting for 73% of the total volume of retail payments during this period, while online purchases made up the remaining 27%.

However, e-commerce was the main driver of growth, with online sales up 7.8% compared to last year, reflecting continued demand for early-season amenities and promotions.

“The key surprise here…is that consumer spending is reasonably holding up given weaker consumer confidence than we saw at this time last year and a number of headwinds and concerns about inflation,” Michael Brown, chief U.S. economist at Visa, told CNBC.

Brown noted that the 2025 holiday season represents a clear shift in consumer behavior, citing the growing influence of artificial intelligence in how shoppers find products and compare prices.

“We’re seeing consumers making greater use of AI for comparison shopping and then helping narrow down that perfect gift,” Brown said. “This is the number one holiday shopping season where nearly half of consumers in this survey responded that they would leverage AI for one of these two tasks.”

A breakdown of spending categories highlights the shift toward personal goods and amenities, and away from home renovation projects.

Electronics emerged as the best performing category this season, with sales increasing by 5.8%. Visa attributed this jump to the modernization cycle led by “high-performance devices in the age of artificial intelligence.”

Clothing and accessories also posted strong numbers, rising by 5.3%. General merchandise stores — retailers that offer a “one-stop” experience — saw a 3.7% increase.

Conversely, the home improvement sector suffered during the holidays. Spending on building materials and garden equipment fell 1%, indicating that consumers prioritized gift-giving and gadgets over home maintenance as the year ended.

Furniture and home furnishings remained essentially flat, with a 0.8% gain.

While the headline number is positive for the retail sector, the lack of inflation adjustment means that “real” volume growth will likely be more modest depending on the final CPI readings for the period.

Brown said real inflation-adjusted spending growth remains high at about 2.2% this season.

“That’s not so bad considering so much uncertainty this year,” Brown said. “The consumer is unsure, they are cautious, but they are also smart about how they spend their money.”

Visa’s numbers also point to a disconnect between emotions and action this season.

According to CNBC’s All-American Economic Survey published last week, 41% of Americans said they plan to spend less for the holidays this year, up 6 points from last year.

The CNBC survey found that the high cost of goods has emerged as a major factor in determining how much shoppers spend and where, suggesting that years of persistent inflation and higher prices for imported goods from tariffs are being felt at the checkout.