02:55 PM EDT, 10/20/2025 (MT Newswires) -- US holiday spending growth this year may turn out in line with the historical average, though an upside is possible that will likely bode well for softline retail stocks, UBS Securities said in a Monday note.

The brokerage said data from its October survey indicates a 1% increase in this year's holiday spending, matching the average tally over the last 12 years. The expected growth rate already exceeds expectations, despite persistent worries about inflation, it said.

While consumers appeared "less bullish" than they were in September, UBS analysts including Jay Sole said that less than half of the respondents had begun their holiday spending. That means spending is expected to accelerate as holiday season promotions ramp up next month.

"We view this as a positive for softline stocks," Sole wrote.

The survey showed that consumers were hesitant to spend more due to inflation concerns, though UBS downplayed price pressures materializing.

"We don't believe US consumers' inflation fears will become reality," Sole wrote. "Our view is consumers' confidence will rise when they see prices aren't spiking, and this will cause them to spend more than they currently plan to."

The brokerage prefers softline stocks such as Deckers Outdoor ( DECK ) , Ralph Lauren ( RL ) , Levi Strauss (LEVI), TJX (TJX) and Burlington Stores ( BURL ) over names like Nike ( NKE ) and Kohls (KSS).

The Federal Reserve's outlook for inflation and employment likely hasn't changed much since the central bank's September monetary policy meeting, Chair Jerome Powell said last week. Earlier this month, Fed Governor Michael Barr underscored the possibility of tariffs-linked inflationary pressures becoming more persistent, urging policymakers to move cautiously on cutting interest rates further.

UBS analysts see several reasons for an upside to its holiday spending outlook, including "solid" spending intentions among high- and middle-income consumers, unlike the lower-income group that is estimated to account for just 10% of industry sales.

Respondents said they felt "a bit more financially secure," according to the UBS report.

In addition, UBS expects consumer confidence to improve if the ongoing government shutdown ends soon and Washington and Beijing resolve their conflict over trade issues.

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