What’s New
Holiday retail sales rose this year despite Americans still feeling the effects of inflation, new data released Thursday found.
Why It Matters
Retailers were under pressure to get shoppers to buy their holiday gifts early and in bulk since there were five fewer days between Thanksgiving and Christmas this year. The shorter holiday shopping season wasn’t the only setback for retailers as this year’s presidential election caught the attention of many consumers. Sales of general merchandise fell 9 percent in the two weeks that ended November 9, according to the market research group Circana.
Consumer spending makes up almost 70 percent of economic activity in the United States. Americans’ spending habits are carefully watched by economists, particularly during the holiday season, to see how they’re feeling financially.
What To Know
The Mastercard SpendingPulse, a tracker for all kinds of payments including cash and debit cards, found that sales from the beginning of November through Christmas Eve rose 3.8 percent, up from the 3.1 percent holiday shopping increase from a year prior. The last five days of the holiday shopping season made up 10 percent of the total spending.
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The holiday sales growth was higher than the 3.2 percent increase Mastercard SpendingPulse was expecting. The new data was not adjusted for inflation.
What Did Holiday Shoppers Buy?
Clothing sales climbed 3.6 percent this holiday shopping season. The bulk of this growth was from online shopping. Online sales increased 6.7 percent from a year prior while in-person shopping increased 2.9 percent.
Sales of electronics and jewelry also grew, as did spending on restaurants.
Thursday’s data excludes sales in the automotive industry.
What Does Other Spending Data Show?
On December 17, the U.S. Department of Commerce released its most recent consumer spending data, which showed retail sales increased 0.7 percent in November, up from 0.5 percent in October.
However, there were some signs of consumers being cautious with their money as sales at grocery and clothing stores as well as restaurants decreased.
Inflation Still Above Federal Reserve’s Target
Federal Reserve Chairman Jerome Powell told reporters last week when announcing a recent interest rate cut: “The economy is strong overall and has made significant progress toward our goals over the past two years.”
He added: “Inflation has eased significantly over the past two years, but remains somewhat elevated relative to our 2 percent longer-run goal.”
Driven by higher costs for used cars, hotel stays, and auto insurance, inflation edged up slightly last month but remained well below its peak from two years ago.
Consumer prices rose 2.7 percent in November compared to the previous year, up from October’s annual increase of 2.6 percent. On a monthly basis, consumer prices increased by 0.3 percent from October to November, marking the largest one-month rise since April.
What People Are Saying
Michelle Meyer, chief economist at Mastercard Economics Institute, told The Associated Press that the holiday shopping season “revealed a consumer who is willing and able to spend but driven by a search for value” as seen by concentrated online shopping during the biggest promotional periods.
What Happens Next
The National Retail Federation (NRF), the largest retail trade group in the U.S., is set to release its data on November and December sales figures from the Commerce Department.
The NRF predicts that shoppers will have made $979.5 billion to $989 billion worth of purchases in those two months. These projected numbers would represent a 2.5 to 3.5 percent increase over the November to December 2023 period.
This article includes reporting from The Associated Press.