As the holiday season approaches, the National Retail Federation (NRF) has unveiled its much-anticipated forecast, predicting that U.S. retail sales for November and December 2025 will surpass $1 trillion for the first time in history. According to the NRF, sales are expected to grow between 3.7% and 4.2% compared to 2024, reaching between $1.01 trillion and $1.02 trillion. This milestone comes despite lingering economic uncertainties, including tariff pressures and a softening labor market.

The forecast highlights a resilient consumer base, with online and non-store sales projected to lead the charge, growing by as much as 9%. “Consumers remain resilient and are prioritizing spending on experiences and essentials,” said Matthew Shay, NRF’s president and CEO, in the organization’s press release. However, the growth rate represents a slowdown from previous years, reflecting broader economic pressures weighing on shopper sentiment.

Navigating Tariff Uncertainties

Tariff concerns are casting a shadow over the retail landscape. Recent reports from Reuters note that proposed tariffs on imports could drive up prices, particularly for consumer goods. Retailers are bracing for potential cost increases, which might force them to pass on higher prices to consumers or absorb the hits to their margins.

Industry insiders point out that categories like electronics and apparel, heavily reliant on imported goods, could be most affected. “Economic pressures weigh on consumer sentiment,” Reuters reported, echoing the NRF’s cautious outlook. Despite this, the forecast assumes a baseline where tariffs do not dramatically escalate before the holiday peak.

Online Shopping’s Surging Dominance

Online sales are poised for robust growth, with the NRF estimating a 8% to 9% increase in non-store sales, outpacing overall retail growth. This trend aligns with shifting consumer behaviors, as more shoppers turn to digital platforms for convenience amid busy schedules. Deloitte’s 2025 Holiday Retail Survey, as detailed in Deloitte Insights, emphasizes the role of digital conveniences and discounts in driving holiday spending.

“Shoppers are turning to discounts, digital conveniences, and festive experiences amid economic uncertainty,” the Deloitte report states. Mobile shopping and buy-online-pickup-in-store options are expected to see heightened adoption, further blurring the lines between physical and digital retail channels.

Gen Z’s Value-Driven Approach

Gen Z consumers are emerging as a pivotal force in this year’s holiday dynamics, prioritizing value and sustainability. Posts on X (formerly Twitter) highlight their influence, with users noting a focus on budget-conscious shopping. According to insights from various X discussions, Gen Z is driving demand for affordable, eco-friendly gifts, often seeking deals through social media and influencer recommendations.

The Associated Press reports that despite economic uncertainty, American shoppers are expected to spend more overall, with younger demographics like Gen Z leading in value-seeking behaviors. “American shoppers are expected to spend more during this holiday shopping season than last year,” the AP noted, attributing part of this to targeted marketing toward tech-savvy youth.

Seasonal Hiring Faces Headwinds

A softening labor market is tempering seasonal hiring expectations. The NRF projects retailers will add between 265,000 and 365,000 seasonal workers, the lowest in 15 years, down from 442,000 in 2024. This figure, reported by WWD, reflects broader economic slowdowns and reduced need for in-store staff as online sales rise.

X posts from users like Feisty is proud to be a Democrat! and FactPost underscore this trend, with one stating, “2025 holiday hiring will be the lowest in 15 years.” Retailers are optimizing operations with technology, such as AI-driven inventory management, to manage with fewer hires amid labor cost pressures.

Economic Resilience Amid Challenges

Despite the hurdles, the overall forecast paints a picture of economic resilience. The New York Times reports that retailers predict sales increases up to 4.2% “despite shoppers’ concerns about rising costs, inflation and the government shutdown.” This optimism is fueled by strong consumer savings and a desire for holiday cheer post-pandemic.

Analysts from Deloitte note in their survey that festive experiences are key, with shoppers allocating budgets toward experiential gifts like travel vouchers or event tickets. This shift could bolster sectors beyond traditional retail, including hospitality and entertainment.

Strategic Implications for Retailers

For industry insiders, the forecast signals a need for agile strategies. Retailers must navigate tariff risks by diversifying supply chains, as suggested in Reuters analyses. Investing in omnichannel experiences will be crucial to capture the online surge while maintaining in-store appeal.

Moreover, understanding Gen Z’s preferences—such as sustainable products and personalized marketing—could differentiate winners from laggards. As one X post from Fibre2Fashion indicates, “Retailers plan to hire 265,000-365,000 seasonal workers amid a resilient yet cautious consumer climate.”

Broader Market Impacts

The trillion-dollar milestone could have ripple effects on the economy, influencing stock markets and investor confidence. WWD highlights that reaching $1.01 trillion to $1.02 trillion represents a significant benchmark, potentially boosting retail stocks if actual sales meet or exceed expectations.

However, external factors like potential government policies on tariffs remain wild cards. The Associated Press warns of rising prices due to such uncertainties, which could dampen spending if not managed carefully by policymakers and businesses alike.

Looking Ahead to Holiday Execution

As retailers gear up, the emphasis is on precision planning. Insights from Island Pacific’s blog, as shared on X, stress “precise planning, inventory visibility, and omnichannel execution” to turn forecast growth into profits. This includes leveraging AI for demand forecasting and personalized promotions.

Ultimately, the 2025 holiday season will test the retail sector’s adaptability, with success hinging on balancing economic pressures against consumer enthusiasm for the holidays.