US Holiday Retail Sales Slow From Last Year, Mastercard Data Shows

Retail sales rose 3. 1 percent between Nov. 1 and Dec.

24, down from last year’s 7. 6 percent spike, according to Mastercard’s latest SpendingPulse report. The results fell short of the company’s 3.

7 percent estimate. Online sales advanced 6. 3 percent, down from the 10.

6 percent gain at the same time a year ago. In-store sales edged up 2. 2 percent, down from 6.

8 percent in 2022. The data, which are not adjusted for inflation and excludes automotive sales, revealed that consumers spent the most on restaurants (7. 8 percent), apparel (2.

4 percent), and groceries (2. 1 percent). Jewelry and electronics sales tumbled 2 percent and 0.

4 percent, respectively. Despite the decline from 2022, the numbers highlighted a resilient consumer and a healthy economic backdrop, says Michelle Meyer, the chief economist at Mastercard Economics Institute. “This holiday season, the consumer showed up, spending in a deliberate manner,” said Ms.

Meyer in a statement. “The economic backdrop remains favorable with healthy job creation and easing inflation pressures, empowering consumers to seek the goods and experiences they value most. ” Consumer Sentiment Slides as Inflation Fears Jump Consumer Watchdog Lists 5 ‘Woke’ Companies to Avoid During Holiday Buying Market analysts say the discounts were not as deep as in previous years despite large retailers, like Amazon and Walmart, accelerating promotions heading into Black Friday and Cyber Monday.

While more Christmas-related spending data will be released in the coming weeks, the early estimates could highlight that the various headwinds, like higher prices and borrowing costs, are beginning to reverse the narrative of a strong consumer. Additionally, BEA statistics confirmed that the personal savings rate crept up to 4. 1 percent in November.

Economists note that the combination of ebbing real disposable personal income growth, above-trend inflation, the exhausting of pandemic-era savings, the resumption of student loan payments, and high-interest rates are diminishing consumers’ appetite and ability to mirror the spending observed earlier in the year. Even if the holiday season proves to be strong, experts argue that the trend will unlikely persist in 2024. The Conference Board economists anticipate consumer spending will be unable to maintain the trend seen in recent years, citing dwindling pandemic savings, growing household debt, elevated inflation and interest rates, and new student loan repayment requirements.

Consumers could start to bend, but they will not be broken in 2024, according to Ginger Chambless, the head of research of commercial banking at JPMorgan Chase. However, robust household balance sheets and tight labor markets could prompt consumers to keep spending, she added. “Considering the cross currents, we think consumer spending growth can stay positive overall in 2024, but at a lower rate than 2023,” Ms.

Chambless wrote in a note. Overall, there is plenty of debate over what the next 12 months will bring to the U. S.

economy, particularly on the recession front, said Eric Hundahl, BNY Mellon Investment Management Head of Portfolio Strategy. The good news for the economy’s future is that consumer sentiment dramatically improved in December. “Consumer sentiment confirmed its mid-month reading and soared 14% in December, reversing all declines from the previous four months.

These trends are rooted in substantial improvements in how consumers view the trajectory of inflation,” said Joanne Hsu, the director of Surveys of Consumers, in the monthly index readings. .