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Will retailers and merchants have a strong holiday season? That depends. This year, more than most, the 2025 holiday season will actually be two holiday seasons.

If your business caters to higher-income individuals or if you’re located in a wealthier part of the country, you’ll probably have a decent holiday season. True, even the wealthy are cutting back. But according to the HR firm ADP average salaries have risen between 4.5% and 6.7% depending on whether workers stayed or switched jobs. The stock markets, though increasingly volatile, are up over 13% since the beginning of the year. And in some parts of the country, notably New York, Boston, DC and San Francisco, the average household income is over $125,000 – almost $41,000 higher than the national average. People in this demographic may be a little more cautious but they’ll spend.

Don’t believe me? Just take a walk in or near Soho, Georgetown, Presidio Heights or Beacon Hill. Restaurants selling $49 chicken parms and $16 baked potatoes … and they’re full. Vegas steakhouses are still getting $165 for a porterhouse – and the tables are packed. I searched for a room recently near Dana Point, California, and the Marriott there was sold out … at $750 a night!

But for many others? That’s a different story.

Another analysis from the HR giant Paychex reports that rises in hourly wages – those mostly earned by blue-collar workers – have been tracking below 3% for over a year (it’s currently at 2.58%).

According to Van Hesser, the chief strategist at credit rating analysis agency KBRA, the top 10% of earners account for 50% of spending. But the rest? They’re not going to spend as much this year. They’re already riddled with credit card debt. They’re mostly not participating in the stock market boom. They are barely making rent, let alone splurging on holiday gifts.

That doesn’t mean the remaining 90% of the US won’t be visiting stores. But it’s guaranteed that they’ll be spending less. Costs are much higher. Promised tax rebates and pie-in-the-sky “tariff” refunds aren’t happening this year. And with millions losing their jobs this year alone thanks to corporate mismanagement, restructurings, profit-taking and the creepage of AI, the next few years are sure to be uncertain.

The annual major surveys of retail sales are telling us just that.

For example, an S&P Global Ratings report expects holiday sales (November-December) will grow 4% in 2025 from 2024, but thanks to weaker consumer confidence on the “uncertain macroeconomic outlook” those researchers say that most of these sales increases won’t be volume related, but due to increased prices that actual retail spending when you take out inflation will “remain relatively flat”.

The consulting giant Deloitte is projecting that holiday retail sales will grow between 2.9% and 3.4% in 2025. But this is well below the 4.2% from last year’s growth and below the 10-year average of 5.2%. The reasons given are all the same: tariffs, inflation, uncertainty.

“It’s a tale of two economies,” said KRBA’s Hesser. “While wealthy consumers continue spending, the less wealthy are pulling back – evidenced by earnings misses from fast-casual dining (Chipotle, Cava) and decade-high unemployment for recent college graduates.”

Hesser also warns that the negative wealth effects that could come from an equity market correction “can create headwinds across the entire consumer landscape, from staples to discretionary categories like travel and leisure – especially as we head into the holiday season”.

So how will small businesses – my clients – fare this holiday season? Considering that for most, holiday sales make up as much as half of their annual revenue, it’s a very important question.

I’m sure the usual crowds will be out supporting them on Small Business Saturday. And for those doing business to the right demographic – the top 10% of earners, they’ll be fine. Or if they’re located in the more affluent areas of New York, Boston, DC and San Francisco they’ll be fine too. Others may have more of a challenge this year.