You may not believe it if you had to stand in line to get some last-minute shopping done, but 2023 holiday retail sales failed to meet some expectations despite positive growth over last season.
U.S. holiday retail sales (minus auto sales) rose 3.1% year-over-year in the period between Nov. 1 and Dec. 24, according to payment processor Mastercard (MA) -).
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“This holiday season, the consumer showed up, spending in a deliberate manner,” said Michelle Meyer, Chief Economist, Mastercard Economics Institute. “The economic backdrop remains favorable with healthy job creation and easing inflation pressures, empowering consumers to seek the goods and experiences they value most.”
Despite Mastercard's optimistic tone, the 3.1% increase is lighter than the 3.7% growth the company forecast for the holiday season in September. At the time, Mastercard said it expected personalized promotions to sway a more "selective and value-focused" consumer.
But overall, spending growth in 2023 less than half of last year's 7.6% growth.
Americans seemed willing to spend on apparel this holiday season — the segment saw a 2.4% increase in sales — though they weren't willing to splurge on jewelry (2% decline).
Electronics also saw a modest decline (0.4%) while people spent more on eating in (groceries saw a 2.1% increase) as well as eating out with restaurant spending rising 7.8% year over year.
Mastercard expected holiday grocery spending to increase nearly 4% while restaurant spending was expected to climb just 5.4%, according to its September report.
“Retailers started promotions early this season, giving consumers time to hunt for the best deals and promotions,” said Steve Sadove, senior advisor for Mastercard.
“Ultimately it was about getting the most bang for your buck as consumers spent on a variety of goods and services, resurfacing spending trends from before the pandemic.”
E-commerce continued to show strong growth, rising 6.3% year-over-year, slightly below its September forecast of 6.7%.
Mastercard isn't the only entity tracking holiday spending, and over the coming days and weeks other economic data watchers will be coming out with their own numbers.
The National Retail Federation, for example, forecast 2023 holiday spending to rise between 3% and 4% year-over-year to between $957.3 billion and $966.6 billion.
"Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” NRF Chief Economist Jack Kleinhenz said at the time. “We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace."
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