Shoppers opened their wallets this holiday season as they have for much of 2023, even crowding into shopping malls to scoop up last-minute holiday gifts and discounts in the days before Christmas.
U.S. retail sales rose 3.1% from Nov. 1 through Dec. 24, according to Mastercard SpendingPulse, which measures sales in stores and online. The estimate, which isn’t adjusted for inflation and excludes cars, reflects a year marked by rising prices and a strong U.S. job market.
After a busy Thanksgiving and Black Friday weekend, many consumers waited for the last minute to shop, expecting prices to drop and with a full weekend before Christmas. Some analysts estimated Saturday, Dec. 23, was the biggest sales day of the year—topping Black Friday.
“Without concerns about supply or feeling like they will miss deals, they don’t have a reason to spend earlier,” said Marshal Cohen, chief retail industry adviser for Circana.
Online retail sales increased 6.3% year over year, while in-stores sales rose 2.2%, according to Mastercard SpendingPulse. There were pockets of weakness, with sales of electronics and jewelry declining year over year from Nov. 1 through Dec. 24. The strongest category of growth was in restaurants, as people dined out and menu prices were higher.
Strong spending, especially on travel and dining, helped buoy the U.S. economy in 2023 even as the Federal Reserve pushed up interest rates to the highest levels in more than two decades. Spending eased in some categories, especially appliances and electronics, after many households splurged during the pandemic.
Retailers have given a mixed reading on the state of their businesses during the critical holiday season. Some stores have logged steady sales while others have cautioned that people are pulling back.
The U.S. job market remains strong, though many consumers have less savings and face rising costs for credit-card balances. And millions of Americans have also resumed monthly payments on their student loans.
The economic backdrop has improved. Inflation has cooled from its peak earlier this year as the Federal Reserve has raised interest rates. The Fed’s preferred inflation measure fell 0.1% in November from the previous month, the first decline since April 2020, the Commerce Department said Friday. Prices were up 2.6% on the year, not far from the Fed’s 2% target.
Investors got some cautionary signals from Nike and FedEx, which reported their latest quarterly earnings days before Christmas. Both companies lowered their revenue forecasts and disappointed investors, who sent their shares tumbling.
Demand for Nike’s sneakers and apparel was soft outside of events such as Black Friday, Chief Financial Officer Matt Friend told analysts Thursday. There was less traffic to the company’s e-commerce platforms, while competitors offered higher levels of promotions, Friend said.
FedEx Chief Executive Raj Subramaniam said the mix of consumer spending between goods and services is close to prepandemic levels. “The inventory destocking phase is over. But the restocking phase has yet to begin in earnest,” Subramaniam said on an earnings call last week.
Retailers, looking to avoid being stuck with excess inventory, started dangling “Black Friday” discounts earlier in the season. Amazon hosted its Prime Day sales event in October, and big chains such as Walmart and Target rolled out Black Friday deals over several weeks.
Through Dec. 16, unit sales of discretionary general merchandise had declined 6% compared with last year, according to Circana. Some categories remained holiday staples: Top sellers for children included toy building sets and plush toys. For adults, prestige beauty and portable beverageware.
This was one of the longest holiday seasons with 31 days from Black Friday through Christmas Eve.
“People think that’s good for business because it enlarges the selling window,” said Craig Johnson, president of research firm Customer Growth Partners. “But it creates a December lull. The longer the season, the bigger the lull.”
Johnson estimates that November sales averaged $14.9 billion a day, compared with an average of $13.8 billion a day from Dec. 1 through Dec. 15. He said the Saturday before Christmas pulled in $47 billion in sales, $2 billion more than he expected. That made it the biggest shopping day of the season, with Black Friday a close second.
The week after Christmas has gained importance for retailers, as consumers visit stores to make returns or seek out deeper discounts. Some chains began promoting their post-Christmas sales well before Christmas Eve. Macy’s mailed a promotional flier the week before Christmas touting 20%-60% off clothing, accessories and home items for purchases made online Dec. 25 and in stores Dec. 26 through Jan. 2.
The National Retail Federation, a trade group, has predicted holiday sales will rise between 6% and 8% to between $942.6 billion and $960.4 billion from Nov. 1 through Dec. 31. The figures exclude spending at car dealers, gas stations and restaurants. The trade group is expected to give its updated tally on the season in January.
Write to Sarah Nassauer at Sarah.Nassauer@wsj.com and Suzanne Kapner at suzanne.kapner@wsj.com