American consumers increased spending on non-essential items during this year's holiday season, with notable increases in dining, grocery, retail, and clothing and apparel sales despite persistent inflation, according to an economic analysis by Mastercard. File Photo by John Angelillo/UPI |
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Dec. 27 (UPI) -- Americans increased spending on non-essential items during this year's holiday season, with notable increases in dining, grocery, retail, and clothing and apparel sales despite persistent inflation, according to an economic analysis by Mastercard.
The Preliminary data -- tracked by the global credit giant each holiday season from Nov. 1 to Dec. 24. -- indicates a robust economic recovery following the COVID-19 pandemic, with fears of a recession fading as the economy showed signs of regaining full momentum.
Among the positive factors, U.S. retail sales grew 3.1% from a year ago, while spending at restaurants saw a substantial boost of 7.8%, the report said.
Online retail sales also surged 6.3% this holiday season, far outpacing 2.2% growth for in-store sales over the same time, suggesting a growing preference for online shopping and showing consumers were willing to spend more in the virtual shopping space compared to a brick-and-mortar store.
In another shopping trend, winter apparel emerged as a popular category for the holidays with consumers spending 2.4% more than they did a year ago on clothes.
Over the past year, the Federal Reserve Bank raised interest rates several times in an effort to lower inflation, although the rate hikes have made it more expensive for people to buy homes, cars, or for businesses to get credit, while aiming to curb consumer demand and bring inflation back to a more typical 2% level.
At its last meeting on Dec. 13, the Central Bank left interest rates unchanged as inflation slowed in November to 2.6% from the previous year, indicating a strong economy that is not currently in recession.
Despite the higher-than-normal inflation, spending remained strong for concert tickets, flights and movies.
Grocery sales were also up 2.1% for the season, according to the report.
Jobs are increasing at a steady pace, although the economy was also experiencing a period of slow growth.
Many of the positive highlights in the report were widely expected, especially after the economy experienced a strong summer followed by solid growth in the third quarter.
A month ago, Black Friday sales hit a record $9.8 billion, which was 7.5% more than in 2022, while Cyber Monday did even better, reaching $12.4 billion, according to Adobe Analytics.
The fact that people are spending more disposable income is good news for the economy now and in the future, according to economists at Goldman Sachs.
"We continue to see consumer spending as a source of strength in the economy and forecast above-consensus real spending growth of 2.7% in 2023 and 2.0% in 2024 in Q4/Q4 terms," the investment bank noted in it latest financial report released earlier this month.
Despite the increased spending, some retail sectors didn't see much improvement as shoppers spent 0.4% less on electronics and 2% less on jewelry when compared to last year, suggesting that consumers were spending cautiously even as they sought out deals during holiday sales.
The Mastercard analysis did not consider automotive purchases.
