Holiday shoppers increased spending despite higher prices

By ANNE D’INNOCENZIO and HALELUYA HADERO, AP Business Writers

Sales rose this year during the holiday shopping season, even as Americans struggled with high prices for many food and other essentials, according to new data.

Holiday sales from early November to Christmas Eve rose 3.8 percent, beating the 3.1 percent increase from a year earlier, according to Mastercard SpendingPulse, which tracks all types of payments, including cash and debit cards . The last five days of the season accounted for 10% of spending.

This year, retailers have been even more under the gun to attract shoppers buy early and bulk because there were five more days between Thanksgiving and Christmas.

Michelle Meyer, chief economist at the Mastercard Economics Institute, said the holiday shopping season “revealed a consumer who is willing and able to spend, but who is driven by the search for value,” as seen by the concentration of online spending in the longer promotional periods.

The sales increase was higher than the 3.2% increase expected by Mastercard SpendingPulse this fall. The data released Thursday excludes the auto industry and is not adjusted for inflation.

Apparel sales rose 3.6 percent, with most of the growth fueled by online shopping. Spending on restaurants and sales of electronics and jewelry also rose. Online sales were up 6.7% from a year ago, and in-person spending was up 2.9%.

Consumer spending accounts for nearly 70 percent of U.S. economic activity, and economists closely monitor how Americans use their money, especially during the holidays, to gauge how they’re feeling financially.

The the latest government data on consumer spending, released Dec. 17, showed that shoppers stepped up activity in retail stores last month. But auto dealer sales drove most of those gains huge storms created a need for new cars in parts of the Southeast hit by Hurricane Helene in October. Deep discounts at many retail chains also attracted shoppers.

But the report also suggested some consumer caution as sales at grocery stores, clothing stores and restaurants fell. Outside of car dealers and online retailers, sales gains were modest.

Retailers have felt more pressure this year because of the shorter holiday shopping period, but also because of the presidential election that has captured the attention of many consumers. Sales of general merchandise fell 9 percent in the two weeks ended Nov. 9, according to Circana, a market research group. Sales are back, but stores will have to make up for these losses.

A bigger picture of how Americans spend their money emerges next month when the National Retail Federation, the nation’s largest retail trade group, releases its combined bimonthly statistics based on November-December sales figures from at the Department of Commerce.

The group expects buyers to have made purchases worth $979.5-$989 billion in November and December, which would represents an increase of 2.5%-3.5%. in the same two-month period a year ago. That would be a slower rate than the 3.9 percent increase in the 2023 holiday over the 2022 holiday season.

Overall, retailers got off to a decent start unofficial shot during the holiday shopping season, despite the many discounts that have started since October.

Originally published: December 26, 2024 at 8:34 am MST