🎁 Consumer Confidence And The 2025 Holiday Shopping Season

In today’s newsletter we discuss consumer confidence and the holiday shopping season, Google’s TPUs chips might be a $1 trillion dollar revenue driver, Jelly Roll gets a pardon, get ready for a S&P 500 for cryptocurrencies, Palantir’s billionaire CEO Alex Karp just purchased a 3,700 acre St. Benedict’s Monastery for $120 million dollars, Jake Paul got his butt handed to him but still made $92 million dollars for the fight, the Kansas City Chiefs just signed a deal to build a $2.5 billion dollar domed stadium in Kansas City, Kansas, Coinbase is launching a prediction market, and Google wants to replace Zillow.

Let’s get into it.

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🎁 Consumer Confidence And The 2025 Holiday Shopping Season

The 2025 holiday shopping season is almost over, with Christmas only a few days away. This year, the season is proving to be highly unusual and a pretty stressful period for most American consumers - myself included. While the streets and malls may look traditional, the financial data reveals consumers who are increasingly divided and deeply concerned about the future of their household budgets.

This year’s holiday season is defined by a significant tension between the desire to celebrate and the reality of rising costs, creating a shopping landscape unlike any in recent memory. For some higher-income households, they’ve barely noticed the higher prices; they’re spending the same, if not more, this holiday season than they did in 2024. For middle and lower-income households, it’s a very different story. Everything is more expensive, but paychecks haven’t kept pace with inflation. The result is that many parents are having to cut back and tell their kids 'no' to simple things, like brand-name cereals or the latest sneakers when their current pair still has plenty of life left in them. I’m speaking from personal experience here.

Economists call this a K-shaped economy. It’s defined by a post-downturn recovery where different economic groups' spending diverges dramatically. Wealthy households see their income and portfolios shooting up the top arm of the 'K,' representing strong growth, while lower- and middle-income households find their incomes lagging or even declining as they face inflation and job insecurity - representing the bottom part of the 'K.' This K-shaped economy marks a stark divide where high-income earners thrive with rising wealth from investments, contrasting with how the rest of us are struggling with the cost of living, stagnant wages, inflation, and mounting debt.

The National Retail Federation is forecasting total holiday sales for November and December to grow between 3.7% and 4.2% over last year, which would push total spending past $1 trillion dollars for the first time ever. In comparison, holiday sales in 2024 totaled $976.1 billion dollars, which was also a record. This growth suggests a resilient consumer, but a deeper look at the data shows a clear divergence in financial health. According to a PwC survey, consumers overall expect their average seasonal spending to decline by 5% from 2024 - the first notable drop in expectation since 2020. 

Americans still feel like giving this holiday season; it’s just that their spending power isn’t what it used to be even a year ago, and consumers are clearly stressed. Affordability is the main anxiety driving this change in behavior, despite what some politicians may say in their speeches. This only enhances the perception that they are detached from the reality of the average American consumer.

Data from a Gallup poll shows a sharp contrast in planned gift spending based on income. Americans in households earning less than $50,000 dollars now expect to spend $651 dollars on holiday gifts. This marks a drop of roughly $100 dollars from last year’s $776 dollars. This group is clearly tightening their belts. Meanwhile, middle-class Americans in households earning $100,000+ dollars are planning to spend $1,479 dollars, which is up from $1,403 dollars in 2024 - so, basically the same. The overall average estimated gift spending in 2025 sits at $1,007 dollars, almost identical to the $1,014 dollars from the previous year. This stability in the average figure hides that K-shaped recovery where high-income consumers are pulling the numbers up while lower-income groups pull back.

The financial strain is exacerbated by high debt levels and diminished savings. Yea, tell me about it! Total outstanding credit card balances reached an all-time high of $1.23 trillion dollars in the third quarter of this year, according to the New York Federal Reserve. The average credit card balance for Americans carrying debt is now $7,719 dollars - sounds about right. This existing debt load is heavily influencing holiday plans. A survey by the firm Achieve found that 80% of consumers have less than $1,000 dollars set aside for their 2025 holiday expenses. This lack of cash savings means reliance on credit is high, with more than 52% of consumers expecting to incur debt that will take months to pay off. The personal savings rate in September was reported at a low 4.7%, according to the U.S. Bureau of Economic Analysis. Americans are not building a savings buffer, which is forcing many to fund holiday purchases with credit at a time of higher interest rates.

Hmmm, I wonder what’s changed in 2025 to affect Americans' savings and spending habits? Could it have anything to do with the effects tariffs have had on the price of literally everything? Yea, I think we have a winning answer here!

You know what’s one thing making it even easier for Americans to continue spending money so freely in the face of rising prices? Online shopping. Adobe forecasts that online holiday spending will reach $253.4 billion dollars this year, a 5.3% increase over last year. A significant portion of this growth is driven by mobile devices, which are expected to account for 56.1% of all online revenue. To manage the cost of these digital purchases, consumers are turning to 'Buy Now, Pay Later' services in record numbers. Not me, yet, but I have to be honest - I’ve been tempted.

Adobe reported that Cyber Monday alone saw $1.03 billion dollars in 'Buy Now, Pay Later' transactions. Since the start of the holiday season, these flexible payment methods have driven $10.1 billion dollars in total spend. While this helps consumers manage cash flow, a Motley Fool survey found that 57% of users rely on these services to buy items they otherwise could not afford, adding another layer of future financial risk. Consumers just can’t seem to catch a break!

The luxury and discount sectors are showing a widening gap in performance this year. J.P. Morgan research indicates that affluent households earning $200,000+ dollars dominated Black Friday and Cyber Monday sales, while mass-market shoppers are waiting for deeper post-holiday discounts. Roughly 44% of consumers will consider luxury gifts, but 25% of those shoppers are turning to pre-owned luxury items to save money. Discount retailers and off-price chains are positioned to benefit, as 77% of surveyed shoppers plan to 'trade down' on brands. Big-box stores are expected to capture 39% of holiday budgets as families prioritize essential goods over discretionary splurges. This shift highlights a market where value-driven retailers thrive while mid-tier specialty stores face volume declines and tighter margins.

So, let’s get into the root of much of America's angst. I touched on it sarcastically earlier, but get ready for the full firehose version. The pervasive effect of tariffs is a core problem adding to consumers' financial and psychological strain. The average effective tariff rate - which is between 14.4% to 17.9% - is the highest since the 1930s. This is creating upward pressure on the price of goods typically bought for the holidays. Analysis from the Yale Budget Lab estimates that all 2025 tariffs are causing a short-run price level increase of 2.3%. This translates to an average loss of purchasing power of $3,800 dollars for the average American household. Ouch!

This effect is not uniform across all products. Apparel and related prices are estimated to increase by 17% under the new tariffs. This directly hits the cost of clothing, shoes, and bags often purchased as gifts. This elevated cost for staple consumer goods is contributing to widespread consumer pessimism. So, that explains why I’m feeling so sad every time I pull out my credit card.

Holiday travel and the labor market also reflect this mood of cautious participation. According to Deloitte, more than half of Americans intend to travel this season, but their average travel budget of $2,334 dollars is down 18% from 2024 levels. On the employment side, retailers are being more conservative. The National Retail Federation expects retailers to hire between 265,000 and 365,000 seasonal workers this year, a noticeable decrease from the 442,000 seasonal hires made in 2024. This reduction in seasonal hiring is the lowest level in over 15 years, according to CBS News. The trend reflects a softening labor market and a desire by businesses to keep costs low in an uncertain trade environment. These shifts in travel and employment show that the economic ripples of the holiday season extend far beyond the checkout counter.

The consequence is a fundamental change in how Americans approach holiday shopping. A BMO survey found that 61% of consumers are changing their holiday spending plans this year specifically because of tariff-related concerns. Two in five Americans 41% plan to cut back on spending due to the rising cost of living. Consumers are prioritizing value. A PwC survey shows that 78% of shoppers are seeking less expensive alternatives. More than a quarter of American consumers 25% started their holiday shopping earlier to lock in prices and avoid potential future increases. This strategic, frugal approach demonstrates that while Americans value their holiday traditions, financial pressure has forced them to become highly disciplined.

The 2025 holiday shopping season is typically a period of strong sales growth, but this year it’s not even across all consumers. The National Retail Federation’s prediction of sales surpassing $1 trillion dollars for the first time is a nice soundbite, but I’m highly skeptical of it coming true. The truth will be in the numbers we get when the holiday season is over, and all that’s left are the returns.

Quick Hits

🏦 Business

Google’s custom Tensor Processing Units (TPUs) chips could reach a market valuation of $1 trillion dollars, based on the estimated $10 billion dollars in revenue the company is pulling in per year from the sales of these AI chips. Google’s parent company Alphabet has been scaling their AI data centers, and renting out their TPUs chips to customers who are hungry for AI chips that aren’t named Nvidia and both overly expensive and incredibly hard for companies to get their hands on. To date, Google has only used these TPUs internally, but with demand rising they’ve been approached by other hyperscalers about purchasing these chip sets outright for use in their own data centers. Sensing an opportunity to bring to the markets their own AI chips Google is ramping up production, and has recently signed a multi-billion dollar deal to supply 1 million of their TPUs chips to Amazon-backed Anthropic. Heads up Nvidia, you’ve got new competition coming from Google.

🫘 Entertainment

Country star Jelly Roll, known by his god-given name Jason DeFord, was just pardoned by Tennessee Governor Bill Lee for the two felony convictions he received for a robbery when he was 17, and drug possession when he was 23.

How is this business news? Well Jelly Roll has been a champion of prison reform and redemption, and has made it one of the pillars of his music career. Jelly Roll’s latest tour, the Beautifully Broken Tour, brought in $67.5 million dollars and sold 597,000 tickets across 48 individual shows. Jelly Roll’s net worth is estimated to be over $10 million dollars, and he’s used his platform and fortune to help his community, like building a recording studio in a juvenile jail, supporting reentry programs like the Health and Reentry Project (HARP) that focuses on holistic support for formerly incarcerated individuals, and inspiring others with his own transformation from inmate to a Grammy-nominated artist. Now that’s a role model.

🎲 Prediction Markets

Coinbase is about to launch a prediction market, powered by Kalshi, that will also offer their customers zero commission stock and options trading. This is all in an effort to transform Coinbase into an everything app that CEO Brian Armstrong says will one day be a one-stop financial platform. 

While the prediction market aspect of this deal is interesting and is the lead story, I think the idea of tokenized on-chain equities, that could be traded 24/7/365 without a centralized exchange, is the real hidden story here. This has the potential to upset the order of the entire $127 trillion dollar global equities market.

🪙 Crypto

Right now there's no S&P 500 for cryptocurrencies, but that’s about to change of Bitwise Asset Management’s CEO Hunter Horsley gets his way. Bitwise is seeking approval for a new ETF that would track the top 10 largest cryptocurrencies by market capitalization. We’re talking about the usual suspects like Bitcoin, Ethereum, Ripple, and Solana to name a few.

This proposed ETF, or exchange traded fund, would aim to provide investors with a broad index of cryptocurrencies, similar to how the S&P 500 is structured. The current Bitwise 10 Crypto Index Fund currently holds $1.2 billion dollars worth of cryptocurrencies, and would transition from an OTC product to an ETF listed on the Nasdaq exchange if the SEC gives the green light.

💸 Billionaires

Palantir’s billionaire CEO Alex Karp just purchased ultimate real estate getaway. A 3,700 acre St. Benedict’s Monastery that has been home to Trappist Monks for 68 Years, located in Snowmass, Colorado, for a whopping $120 million dollars. This makes it the most expensive residential real estate transaction in Colorado’s history. The property features a 21,000 square foot main residence, where the monastery and "retreat center" are housed, as well as two smaller dwellings to the west of the main residence and another one that "towers over the entire property" providing views of the private valley and three streams that come with the estate.

Alex Karp is known to spend around five hours a day cross country skiing in the winter as part of his exercise routine that has enabled him to decrease his body fat to just 7%.

So let me see if I got this straight. Alex Karp is CEO of one of the hottest AI companies in the world, he’s a billionaire, is incredibly fit, and is now the owner of a 3,700 acre former monastery that he just bought for $120 million dollars. I can’t even begin to count the ways that doesn’t sound fair.

⛪ Real Estate

Zillow’s stock sank last week by 12% after reports surfaced that Google is testing a new real estate search feature. Zillow’s concern is that Google’s move could redirect traffic away from Zillow’s website. The drop in stock price cut $1.6 billion off of Zillow’s market cap, which has continued to fall and now stands around $14.59 billion dollars from a peak of $31 billion dollars back in 2021.

The Google real estate sales listings appear next to search results, and are powered by real estate data company HouseCanary. Users can view a property’s full details, request a tour, and contact an agent. If users can get everything about a property right from a search result, why would they ever need to visit Zillow’s website again?

Zillow should be nervous right about now.

🥊 Sports

Jake Paul got his butt handed to him by former world heavyweight champion Anthony Joshua on Saturday night, December 20 in the live Netflix streamed match, and at the same time broke his jaw in two places and had to have surgery to fix it while losing a few teeth during the ordeal. On the upside, both Jake Paul and Anthony Joshua will split the $184 million dollar purse evenly, with each boxer making $92 million dollars. For that kind of money you can break my jaw anytime!

🏈 NFL

The Kansas City Chiefs just signed a deal to build a $2.5 billion dollar domed stadium in Kansas City, Kansas - a move that would see the team leave their current home at Arrowhead Stadium in Kansas City, Missouri and move across state lines in 2031 to their team’s namesake Kansas City, Kansas.

Don’t even get me started on why there’s a Kansas City in both Missouri and Kansas. The point is that the Kansas City Chiefs are getting a new stadium, and the Hunt family is kicking in $500 million dollars toward the project’s $2.5 billion dollar price tag.

No doubt the team has their sights on landing a Super Bowl in their new domed stadium, now if only the Kansas City Chiefs can find the endzone and make it to the playoffs next year.

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The Business Behind The News is written, edited, and published by Chris Thompson.