In New York, holiday sales increased this year as American spending held steady during the crucial shopping season despite rising prices for everything from food to rent.
According to Mastercard Spending Pulse, which tracks all types of payments including cash and debit cards, holiday sales increased 7.6%, a slower rate than the 8.5% increase from a year earlier when consumers started spending the money they had saved during the early stages of the pandemic.
A 7.1% increase was what Mastercard Spending Pulse had anticipated. The data, which was released on Monday, does not account for inflation, which has somewhat subsided but is still excruciatingly high, and excludes the automotive sector.
Spending at restaurants and on clothing drove sales in the United States between November 1 and December 24, a crucial time for retailers.
Clothing saw a 4.4% increase overall while jewelry and electronics saw a roughly 5% decline. Online sales increased by 10.6% from the previous year, and in-person purchases increased by 6.8%. Over 2021, department stores only saw a modest 1% increase.
The former CEO and chairman of Saks and senior advisor to Mastercard, Steve Sadove, stated in a prepared statement that “this holiday retail season looked different from years past.” Retailers offered steep discounts, but consumers spread out their holiday spending to account for rising costs as well as a post-pandemic desire for new experiences and festive gatherings. The impact of higher prices overall was seen in some of the increases.
Statistics and Research
Nearly 70% of all economic activity in the United States is generated by consumer spending, and since the first spike in inflation almost 18 months ago, Americans have remained resilient. However, as the cost of necessities consumes a larger and larger portion of everyone’s take-home pay, cracks have started to appear.
Although it has decreased from the four-decade high it reached this summer, inflation is still robbing consumers of their purchasing power. Prices increased 7.1% in November compared to a year earlier, which is less than the peak of 9.1% in June.
Overall spending has decreased since the pandemic-related splurges and has been shifting less toward non-necessities like electronics and furniture and more toward necessities like food. Private-label products have become increasingly popular among consumers because they are typically less expensive than national brands. They have been frequenting discount retailers like Walmart and chain dollar stores.
Additionally, shoppers awaited sales. Compared to a year ago, when people started shopping earlier due to a global disruption of the supply chain that resulted in thousands of product shortages, retailers anticipated a higher number of procrastinators to visit stores in the final few days before Christmas.
Words of Expert
According to Katie Thompson, the director of consulting firm Kearney’s Consumer Institute, “consumers are trying to spread out their budget and are evaluating and shopping at different stores.”
Shoppers significantly reduced their retail spending in November compared to the prior month. The government reported in mid-December that retail sales dropped 0.6% from October to November following a sharp 1.3% increase the previous month. Furniture, electronics, and home and garden stores all saw a decline in sales.
Next month, when the National Retail Federation, the country’s largest retail trade group, releases its combined two-month results based on November-December sales figures from the Commerce Department, a more comprehensive picture of how Americans spent their money will become available.
Compared to the explosive 13.5% growth of a year ago, the trade group anticipates that holiday sales growth will slow to a range of 6% to 8%. Major retailers’ financial results for the fourth quarter will also be scrutinized by analysts in February.