The U.S. holiday shopping season opened with record online spending. However, the underlying economic weakness hints at an impending pullback in consumer spending. November saw another drop in consumer confidence, even as Americans spent a record $44.2 billion online during Cyber Week – Thanksgiving through Cyber Monday – according to Adobe Analytics, per Reuters, as quoted on Yahoo Finance.

Cyber Monday is also expected to have posted robust results, with Adobe projecting spending to fall between $13.9 billion and $14.2 billion for the day, making Cyber Monday the biggest online shopping day of the year, and setting records for that day, per Associated Press, quoted on kcra.com.

U.S. consumers already shelled out $11.8 billion online during Black Friday, $6.4 billion on Thanksgiving Day and another $11.8 billion over the weekend — topping Adobe's forecasts, per the above-mentioned source. When including in-store activity, Black Friday spending rose 4.1% from a year earlier, Mastercard SpendingPulse reported, per CBS News, as quoted on Yahoo Finance.

What Drives the Spending?

Despite robust figures, analysts warn about the future course of spending. John Mercer, head of global research at Coresight, noted that higher costs — partly due to tariffs — and spending by wealthier consumers have shaped this year's retail performance, as quoted on the above-mentioned Yahoo Finance article.

Note that Amazon and other retailers extended steep discounts even on basic goods like batteries and cleaning supplies, signaling that many households are bargain-hunting to buy essentials, said Jack O'Leary of NielsenIQ, per CBS News, as quoted on Yahoo Finance.

Some Analysts Still See Reason for Optimism

Not everyone is pessimistic. Mark Mathews, chief economist at the National Retail Federation, said consumer sentiment has frequently diverged from actual spending over the past five years, per CBS News, as quoted on Yahoo Finance. While shoppers are looking for deals, overall spending has stayed steady.

Some Retail Earnings Show Strength

Dollar Tree Inc. (DLTR Quick QuoteDLTR - Free Report) posted solid third-quarter fiscal 2025 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate and increased year over year. Dollar Tree raised profit outlook. With 85% of the company’s items priced at $2 or less, it delivers strong value, while its multi-price range lets it offer high-quality products and holiday gift options, per management.

American Eagle Outfitters Inc. (AEO Quick QuoteAEO - Free Report) reported solid third-quarter fiscal 2025 results and encouraged adjusted operating profit guidance for the fourth quarter and fiscal 2025. The company delivered top and bottom-line beats in the fiscal third quarter, with both metrics increasing year over year. American Eagle Outfitters has raised guidance for Q4 of fiscal year 2025.

In its third-quarter fiscal 2025 results, Macy’s Inc.’s (M Quick QuoteM - Free Report) top and bottom lines surpassed the Zacks Consensus Estimate. However, net sales decreased, and earnings increased from the year-ago quarter. Comparable sales increased on an owned and owned-plus-licensed-plus-marketplace basis. As a result, the company has raised its fiscal 2025 outlook.

Bottom Line

There is a mixed trend in the retail space — a sign of gradual weakening in household financial stability, but no indication of an outright decline in retail spending. RBC analysts pointed (as quoted on the above-mentioned CBS. News article) to the fact of major front-loaded purchases ahead of tariff-related price increases, which could slow down retail sales ahead.

Still, upbeat earnings outlook offered by some retailers put focus on retail-based exchange-traded funds (ETFs) like State Street SPDR S&P Retail ETF (XRT Quick QuoteXRT - Free Report) , VanEck Retail ETF (RTH Quick QuoteRTH - Free Report) , Amplify Online Retail ETF (IBUY Quick QuoteIBUY - Free Report) and ProShares Online Retail ETF (ONLN Quick QuoteONLN - Free Report) .