Holiday shopping surges, flexing strength of US economy
Holiday spending surged in 2024, blowing past expectations and outpacing customer purchases over the gift-buying season last year, according to data released on Thursday by Mastercard SpendingPulse, which gauges in-store and online retail sales.
The end-of-year flex of consumer strength marks the latest indication of resilient U.S. buying power, which has kept the economy humming despite a prolonged stretch of high interest rates.
Retail sales climbed 3.8% from Nov. 1 to Dec. 24 compared with the same period last year, Mastercard SpendingPulse data showed. The boost in spending exceeded a Mastercard SpendingPulse estimate of 3.2%, while outperforming last year's growth of 3.1%. The retail sales data excludes automotive purchases.
"Solid spending during this holiday season underscores the strength we observed from the consumer all year," Michelle Meyer, chief economist at the Mastercard Economics Institute, told ABC News in a statement.
Jewelry sales grew more than any other product category, climbing 4% compared to last year, the data showed. Spending on apparel and electronics also climbed at a solid pace.
The shopping surge was most pronounced online, where spending grew 6.7% compared to the same period last year, the data showed.
While the overall spending reflects the health of U.S. consumers, the pattern of purchases indicates a search for discounts, Meyer said.
"The holiday shopping season revealed a consumer who is willing and able to spend but driven by a search for value as can be seen by concentrated e-commerce spending during the biggest promotional periods," Meyer added.
The holiday sales growth suggests the U.S. economy has remained robust, even amid high borrowing costs.
Gross domestic product grew at a solid 2.8% annualized rate over three months ending in September, the most recent quarter for which data is available.
The labor market has slowed but proven sturdy. The unemployment rate stands at 4.2%, a historically low figure.
Consumer spending accounts for nearly three-quarters of U.S. economic activity.
The increase in holiday spending coincided with an initial bout of relief for borrowers, as the Federal Reserve cut interest rates by a total of one percentage point over the final few months of the year. However, interest rates still stand at a historically high level of between 4.25% and 4.5%.
Lower interest rates typically stimulate economic activity by making it easier for consumers and businesses to borrow, which in turn fuels investment and spending. However, interest rate cuts usually influence the economy after a lag of several months, meaning the recent lowering of rates likely had little impact on holiday spending.
Earlier this month, the central bank predicted fewer rate cuts next year than it had previously indicated, suggesting concern that inflation may prove more difficult to bring under control than policymakers thought just a few months ago.
Speaking at a press conference in Washington, D.C., earlier this month, Federal Chair Jerome Powell indicated that the willingness to keep interest rates high stemmed in part from the health of the U.S. economy and the shoppers propelling it.
"We think the economy is in a really good place," Powell said, later adding: "Growth of consumer spending has remained resilient."
