One would think that with all the pressure on Americans’ finances due to higher gas prices and stubborn inflation that the 2026 holiday season might not be the most merry for many households.
But the latest customer data from Bank of America accounts suggests that this assumption couldn’t be further from the truth.
Analysts at Bank of America recorded “solid” consumer spending in September, with aggregated credit and debit card spending rising 6.2% compared to last year, according to a BofA note viewed by TheStreet. Excluding rising spending on gas, customers still spent 5.1% more year over year.
For retailers, perhaps the most promising news from the note was that consumers have already begun spending on holiday items this year, much earlier than they did a year ago.
Holiday shopping starts earlier than last year
According to BofA, wealth effects are driving U.S. spending growth, not wealth gains, so unless there is a sharp correction in equity markets, the spending trends will probably continue through the end of the year.
“Now that summer is over, the next big gauge of consumer momentum is how people spend during the run-up to, and over, the holiday season. It is early days, but September spending on holiday items ran well ahead of 2025,” BofA analysts said.
“Given the backdrop of firmer after-tax wage growth and breadth across retail and services categories, this is perhaps not surprising. However, some of this spending strength could be due to rising prices as opposed to more purchases.”
According to the data, holiday spending’s true inflection point isn’t until mid-November. Still, holiday shopping in 2025 started much earlier, in the second week of October. And 2026 spending has kicked off even earlier.
Buy now, pay later plays a part in holiday spending
Despite the fact that much of the spending growth is being fueled by wealthier households, BofA is still seeing increased use of buy now, pay later options to fund holiday shopping.
“A concern often raised as we move into the holidays is whether consumers will lean on less traditional forms of credit such as buy now, pay later (BNPL) to finance their spending,” analysts said.
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BNPL users tend to have higher credit card utilization rates, and when analyzing their own customer deposit data, BofA found a seasonal increase in BNPL use during the winter holiday period.
But while its use is increasing, its not accelerating.
“While the underlying trend in BNPL usage is upwards, there are no signs of a sharp acceleration. We do, however, see some evidence that BNPL is being used to finance more expensive purchases, with the share of households making repayments above $500 rising, albeit relatively slowly,” BofA said.
Discretionary and necessary spending both rise
The analysts split the spending into two categories: “nice to have” (discretionary) and “need to have” (necessity).
They break those categories down even further into a spectrum.
- More discretionary: Furniture, electronics, building materials, online retailers, clothing, and miscellaneous stores
- Partly discretionary: Auto, health, and personal care; general merchandise
- Mostly necessity: For example, groceries
And through their checks, the analysts see growth across the entire spectrum of spending.
“Even within these categories, the edges will be blurred, but the overall impression is that retail spending growth is widely distributed, with spending rising across all fronts. One caveat: ‘mostly discretionary’ spending has been making a smaller contribution since June,” analysts said.
