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Holiday spending posts largest increase in 17 years

Consumers increased spending on clothing, jewelry, and electronics

Man Christmas shopping online
Photo (c) Marko Geber - Getty Images
Concerns about a spike in COVID-19 cases this fall did nothing to dampen consumers’ holiday spending. A report from Mastercard SpendingPulse shows that holiday retail sales rose 8.5% over last year, the biggest jump in 17 years.

Compared to last year, online transactions grew by 11.0%. The survey measures in-store and online retail sales across all forms of payment from Nov. 1 to Dec. 24.

“Shoppers were eager to secure their gifts ahead of the retail rush, with conversations surrounding supply chain and labor supply issues sending consumers online and to stores in droves,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “Consumers splurged throughout the season, with apparel and department stores experiencing strong growth as shoppers sought to put their best-dressed foot forward.”

The report also shows that consumers began shopping earlier than usual due to concerns that supply chain issues would limit the supply of the most popular gifts. Those concerns failed to materialize, however. Spending also increased later in the season as retailers offered more special promotions.

A big Black Friday weekend

Black Friday was the biggest day for spending during the 2021 holiday season. During the Thanksgiving weekend, shoppers drove U.S. retail sales up 14.1% year-over-year. In-store sales also rebounded, increasing 16.5% year-over-year. E-commerce sales experienced sustained growth, increasing by 4.9% over last year.

Online shopping made up 20.9% of total retail sales during the holiday season, up from 20.6% in 2020 and 14.6% in 2019. The report notes that online shopping got a strong boost from the pandemic, a trend that is expected to last.

Apparel, jewelry, and electronics were the most popular spending sectors, with all three categories registering strong growth over the 2020 holiday season.

After the 2021 holiday spending spree, consumers who used credit cards to make their purchases will be faced with paying for them in 2022. While credit card balances dropped sharply during the first year of the pandemic, the average consumer carries more than $5,600 in credit card debt, according to MoneyGeek.

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