US holiday retail sales surge by 3.1%: Mastercard

Recent Mastercard spending data revealed holiday retail sales grew 3.1% year-over-year. Apparel, grocery, and restaurants saw gains, while electronics and jewelry lagged. Yahoo Finance’s Julie Hyman and Josh Lipton analyze consumer spending trends amid inflation and other economic concerns.

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Video Transcript

JOSH LIPTON: Meanwhile, holiday spending in the US grows 3.1% this year. That's according to preliminary insights from Mastercard SpendingPulse, the latest report showing apparel and restaurant as some of the top categories for shopping this year. So did get a check on the consumer here, Julie. It's courtesy of Mastercard, out with this new report.

The headline is US retail sales rose 3.1% between November 1 and December 24, apparently slower than last year's rise but maybe not too surprising given some of the challenges we know consumers have been facing with inflation and higher rates. Under the hood of the report, some interesting trends to call out there. Apparel was up about 2%. Restaurant up about 8% during the period. Purchases of electronics and jewelry were not as good. Of course, the question is now, what happens next in the months and quarters ahead in 2024?

JULIE HYMAN: Yeah. And as you mentioned, there was a slowdown in spending from last year in the rate of spending. Last year, it was a 7.6% gain. So definitely a pretty sharp there compared with what had seen, especially considering the inflation that we've seen in the last year. And I don't believe this is an inflation-adjusted number-- so just to get that out of the way.

It was also interesting to see how people and where people were spending, like physically where they were spending. Online sales were up 6.3%. In-store sales were up 2.2%. So online still proving to be very popular, which I think any of us could have known anecdotally from the number of Amazon and other delivery trucks and boxes that we are seeing on our neighbors' doorsteps or vestibules, as it were, depending on where folks live. So that-- that's quite interesting as well. Now, whether it's going to continue, you know--

JOSH LIPTON: Yeah, that's the big question.

JULIE HYMAN: We'll see.

JOSH LIPTON: Well, because it's so-- and it really is interesting because you-- as [INAUDIBLE] says, the consumer goes, the economy goes. And there's so many interesting crosscurrents. I mean, we've spoken to a lot of smart economists and strategists, because on the one hand, you're trying to navigate the labor market is still sturdy. Inflation is cooling. Gas prices-- we've talked to pros on that as well-- coming down. Maybe some possible Fed easing in the pipeline.

But on the other hand, you'll get folks who are a little bit more skeptical. And they'll say, dwindling savings, they'll talk about, right? So there are some challenges. You also hear about just from the companies we've heard from recently. I thought Nike, for example-- we broke those earnings last week. And when they started talking about the executives there, about maybe that second half, softer revenue outlook. So hard to tell which one-- which way it's going to fall out here in 2024.

JULIE HYMAN: Yeah, it is difficult. But as we know, people who bet against the consumer this year, that was the wrong call. And we also know, from some of the consumer sentiment surveys, that consumers are expecting inflation to decelerate pretty sharply. So that's a good sign for that. We'll see how that then feeds back--

JOSH LIPTON: And, of course, as we--

JULIE HYMAN: Into the perspective.

JOSH LIPTON: --always mention too, there are many kinds of consumers, right?

JULIE HYMAN: Yes.

JOSH LIPTON: And how those challenges affect them depends--

JULIE HYMAN: Of course.

JOSH LIPTON: --where on the ladder you're sitting.

JULIE HYMAN: Yes, a good caveat.