Holiday sales rose this year as spending in the US remained resilient during the critical shopping season, despite surging prices on everything from food to rent.
Holiday sales rose 7.6 percent this year, a slower pace than the 8.5 percent increase of a year earlier when shoppers began spending the money they had saved during the early part of the COVID-19 pandemic, said Mastercard SpendingPulse, which tracks all kinds of payments including cash and debit cards.
Mastercard SpendingPulse had expected a 7.1 percent increase.
Photo: AFP
The data released on Monday excluded the automotive industry and was not adjusted for inflation, which has eased somewhat, but remains painfully high.
US sales between Nov. 1 and Dec. 24, a period that is critical for retailers, were fueled by spending at restaurants and on clothing.
By category, clothing rose 4.4 percent, while jewelry and electronics dipped about 5 percent. Online sales jumped 10.6 percent from a year earlier and in-person spending rose 6.8 percent. Department stores registered a modest 1 percent increase.
“This holiday retail season looked different than years past,” Steve Sadove, former Saks Inc chief executive and chairman and a senior adviser for Mastercard, said in a prepared statement. “Retailers discounted heavily, but consumers diversified their holiday spending to accommodate rising prices, and an appetite for experiences and festive gatherings post-pandemic.”
Some of the increase reflected the impact of higher prices.
Consumer spending accounts for nearly 70 percent of US economic activity, and Americans have remained resilient ever since inflation first spiked almost 18 months ago. However, cracks have begun to show, as higher prices for basic necessities take up an increasingly large share of everyone’s take-home pay.
Inflation has retreated from the four-decade high it reached in the summer, but it is still sapping the spending power of consumers. Prices rose 7.1 percent last month from a year earlier, down from a peak of 9.1 percent in June.
Overall spending has slowed from pandemic-infused splurges and shifted increasingly toward necessities such as food, while spending on electronics, furniture, new clothes and other non-necessities has faded.
Many shoppers have been trading down to private label goods, which are typically less expensive than national brands. They have been going to cheaper stores such as dollar chains and big-box stores such as Walmart Inc.
Consumers also waited for deals. Stores expected more procrastinators to hit the stores in the last few days before Christmas compared with a year earlier when people began shopping early due to a global disruption of the supply chain that created thousands of product shortages.
“Consumers are trying to spread out their budget, and they are evaluating and shopping at different stores,” Kearney’s Consumer Institute lead of consultancy Katie Thompson said.
Last month, shoppers cut back on retail spending compared with the previous month. Retail sales fell 0.6 percent from October after a sharp 1.3 percent rise the previous month, as sales fell at furniture, electronics, and home and garden stores, US government data showed.
A broader picture of how Americans spent their money arrives next month when the National Retail Federation, the nation’s largest retail trade group, comes out with its combined two-month results based on last month’s and this month’s sales data from the US Department of Commerce.
The trade group expects holiday sales growth would slow to a range of 6 to 8 percent, compared with the blistering 13.5 percent growth of a year earlier.
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