The Unstoppable Shopper: Why U.S. Consumer Spending Is Expected to Defy the Odds in 2026

This article first appeared in our sister publication Shop Eat Surf Outdoor

Key takeaways: 

• Resilient spending: U.S. consumer demand defies geopolitical and economic headwinds.
• NRF Forecast: 4.4% retail growth projected for 2026, beating pre-pandemic norms.
• K-Shaped split: High-income luxury and low-income value sectors are drifting apart.
• Experience first: Gen Z and millennials prioritize travel and dining over “stuff.”
• Global risks: The war in Iran and potential tariffs remain the primary “wild cards.” 

The U.S. economy experienced a series of fluctuations throughout 2025, characterized by ongoing policy uncertainty, inflation and shifting global dynamics.  

“However, the one bright spot through these ups and downs was the consumer, whose continued spending was a key economic driver in 2025,” said National Retail Federation (NRF) Chief Economist Mark Mathews during the group’s  State of Retail & the Consumer presentation earlier this month.  

In 2025, retail sales grew by nearly 4% over 2024 to a record $5.4 trillion, according to the NRF. Over the holidays, sales reached more than $1 trillion for the first time in history, and the NRF forecasts even stronger growth in 2026.   

Low unemployment rates, steady wage gains and larger tax refunds are contributing to a stable economic foundation, Mathews said. Consumers are finding ways to balance their budgets while still prioritizing the goods and experiences they value most.  

NRF Forecasts Continued Growth in 2026

For 2026, the National Retail Federation (NRF) anticipates that retail sales will grow by 4.4% in 2026. This forecast, developed in partnership with Oxford Economics, represents a healthy expansion compared to the 3.6% average growth seen in the decade prior to the pandemic.  

This projected growth is supported by several macroeconomic factors but does not take the risks associated with the war in Iran into account.   

Early in the year, consumers are expected to benefit from a degree of stimulus driven by larger refunds from tax cuts in the Working Families Tax Cut Act. While inflation will likely remain elevated in the first half of 2026, economists project it will fall by the third quarter, offering relief to shoppers. Because goods inflation is expected to remain in a lower band, a large proportion of the NRF’s forecasted 4.4% increase will reflect real growth in volume, rather than just an inflation-induced rise in nominal spending.  

However, the landscape is not without its challenges. Retailers and consumers alike are navigating mounting issues, including the lingering effects of inflation and the potential implementation of new tariffs. Most recently, the war in Iran has introduced a new layer of complexity, threatening to impact global supply chains and energy prices.   

Retailers Report Strong Quarterly Results

The resilience of the consumer is evident in recent financial disclosures from a wide range of retailers. Recent fourth-quarter and full-year results highlight this trend:  

• American Eagle: Total revenue reached $1.8 billion in the fourth quarter, a 10% increase year-over-year, with comparable sales up 8%.   

• Costco: Net sales for the second quarter of fiscal 2026 reached $68.2 billion, an increase of 9.1% from the previous year. Comparable sales (including digital) rose 22.6%.  

• Gap: The company reported revenue of $4.24 billion in the fourth quarter, representing 3% comparable sales growth, alongside net income of $171 million.   

• Journeys: The footwear retailer posted a 12% comparable store increase for the fourth quarter.   

• Macy’s: Fourth quarter net sales of $7.6 billion exceeded company guidance, with comparable sales growing 1.8%. Bloomingdale’s saw comparable sales rise 9.9%.  

• Tilly’s: Fourth-quarter net sales increased 5.3% to $155.1 million, and operating income improved to $2.6 million from an operating loss the prior year.  

• Zumiez: Net sales grew 4.4% to $291.3 million in the fourth quarter, with gross margins expanding by 200 basis points.  

Warehouse clubs, in particular, are seeing the benefits of a consumer base focused on maximizing their purchasing power.   

“As we look at the overall state of the consumer and our members and how they’re shopping, I think it really is a continuation of trends we’ve seen over the last few quarters, where members are very focused on quality and value and exciting new items are very important,” said Costco CFO Gary Millerchip on the company’s latest earnings call.   

“When you deliver on those things, we’re seeing our members are willing and have the capacity to spend. The fact that our buyers continue to find new and exciting items has resulted in our overall sales results each month when you strip out the noise around calendar shifts and short-term issues like port strikes and tariffs.”  

A Bifurcated Economy and Shifting Demographics

While the overarching numbers point to growth, the recovery and spending patterns are distinctly “K-shaped.”  

“We are increasingly seeing a K-shaped economy where the rich get richer and the poor get poorer,” said Eoin Comerford, the former CEO of Moosejaw, founder of Outsize Consulting and host of the Outdoor Unfiltered podcast. “For the first time last year, the top 10% of earners drove 50% of all consumer spending. If you are a category (like outdoor) or a retailer (like Macy’s or Bloomingdale’s) that is driven by upper-income earners, then things are fine. If you’re making $200,000 a year, then an extra $0.50 for a gallon of gas isn’t going to impact your wider spending decisions.” 

Households earning more than $150,000 annually have largely insulated themselves from broader economic pressures, bolstered by home equity and stock market gains. These consumers are actively spending on luxury items and premium experiences. Conversely, lower- and middle-income consumers are facing tighter budgets and are increasingly focused on value. 

“Higher-income people are trading down,” said Matt Powell, senior advisor at BCE Consulting and founder of Spurwink River. “While there was tremendous pressure on the lower-income population, people who are more well-off are trading to more value-oriented retailers like Costco and Old Navy in an effort to save money (for themselves).” 

Younger generations, particularly Generation Z and millennials, are altering the retail and hospitality landscapes. 

“Gen Z is now defining themselves as consumers. They’re loyal to a brand until they’re not,” Powell said. “There’s a brand that they fall in love with right now, and in four weeks, they could change their mind to find another brand. And so it’s very difficult to hang on to them. You have to communicate to them in the ways that they want to be communicated to, which is social media.” 

These consumers place a high premium on convenience and technology. For example, younger shoppers are driving the demand for off-premise dining, utilizing apps for delivery and takeout because they are willing to pay for the convenience it provides to their daily routines. 

Continued Desire for Travel and Restaurants

Consumers are not just buying physical goods; they are prioritizing experiences. The travel and restaurant industries are seeing sustained demand as Americans look for ways to treat themselves and celebrate occasions.  

In the restaurant sector, sales are projected to hit $1.55 trillion this year. The National Restaurant Association expects 4.8% growth in retail sales within the industry. Even when stripping out menu price increases, the sector is anticipating positive real growth. People are tired of cooking and washing dishes, and they view dining out as a necessary lifestyle priority.   

The travel industry echoes this sentiment. The U.S. Travel Association notes that leisure travel spending accounts for more than $800 billion annually. Despite higher costs, travelers remain undeterred. Recent survey data indicates that 90% of consumers have a trip planned in the next six months.  

Travelers also dedicate a portion of their vacation budgets to retail, accounting for roughly $115 billion in shopping expenditures annually. People still want to do things, and they are allocating their discretionary income to ensure those experiences happen.  

Risk Factors for 2026

Even with a strong consumer base, retail leaders are monitoring several external risks that could alter the economic trajectory. Previously, the primary concerns centered around inflation and the potential for new trade tariffs, which directly affect the cost of imported goods.  

Now, geopolitical instability has introduced a new variable: the war in Iran. The conflict has the potential to disrupt global energy markets and alter established shipping routes.   

Powell identified the growing conflict in the Middle East as the chief threat to consumer spending, and Costco’s Millerchip also said the war could impact fuel costs and shipping schedules if instability continues.  

 “The biggest risks are those that impact these high wage earners, e.g., a major increase in white collar unemployment due to AI or tariffs, or a major drop in the stock market (the top 10% own 87%-90% of U.S. stocks),” said Comerford. “The drop could be driven by the AI bubble bursting, the global oil shock from an extended war in Iran or the same white-collar job losses.”