Sales have seen an increase during this year’s holiday shopping season, even as many Americans confront higher prices for everyday items. New data shows that from the start of November until Christmas Eve, holiday sales grew by 3.8%, surpassing last year’s 3.1% increase. This positive trend was tracked by Mastercard SpendingPulse, which measures various types of payment methods, including cash and debit cards. Notably, the last five days of the shopping period accounted for 10% of total spending.
Retailers faced extra pressure this year, as the time between Thanksgiving and Christmas was notably shorter by five days. To encourage shoppers to buy early and in larger quantities, they implemented various strategies. Michelle Meyer, chief economist at Mastercard Economics Institute, noted that the shopping season highlighted consumers who are eager to spend money but are also keen on finding good deals, particularly online during major sales events.
Sales grew more than initially expected, exceeding Mastercard’s forecasts of a 3.2% increase. The figures released do not include the automotive sector and are not adjusted for inflation. Clothing sales, for example, saw a rise of 3.6%, largely driven by online shopping. Additionally, expenditures at restaurants, and sales of electronics and jewelry also experienced growth. Online sales climbed by 6.7% compared to last year, while in-store spending rose by 2.9%.
Consumer spending plays a crucial role in the U.S. economy, comprising nearly 70% of overall economic activity. Economists keep a close eye on how Americans are spending, especially during the holiday season, as it provides insight into their financial wellbeing.
Recent government data indicated that shoppers were more active in retail environments last month, with most of the gains driven by auto dealerships, partly due to storm-related needs in areas affected by Hurricane Helene. Attractive discounts at many stores also helped draw in customers. However, the report suggested a sense of caution among consumers, as sales at grocery stores, clothing retailers, and restaurants experienced declines. Excluding auto dealers and online retailers, overall sales growth was modest.
Retailers faced significant challenges this year, caught between a shortened holiday shopping timeline and a presidential election that captured consumer attention. In the weeks leading up to November 9, sales of general merchandise dropped by 9%. Although there has been a recovery since then, stores will need to work hard to compensate for earlier losses.
Next month, the National Retail Federation, the leading retail trade group, will provide a broader perspective on consumer spending by releasing sales data combining November and December figures from the Commerce Department. They predict that total purchases during these months will be between $979.5 billion and $989 billion, reflecting an anticipated increase of 2.5% to 3.5% compared to the previous year. This is a slower growth rate than the 3.9% increase recorded from holiday 2023 to holiday 2022.
Overall, the retail sector has begun the holiday shopping season on a positive note, with many discounts initiating as early as October.
