U.S. retail sales up 7.6% in holiday season as deals lure consumers - Mastercard report

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U.S. retail sales rose 7.6% Y/Y this holiday season as retailers provided steep discounts which lured consumers hunting for the best deals, according to a report released by Mastercard (NYSE:MA) on Monday.

The data was published by Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment and excludes automotive sales.

E-commerce continued to be a major driver, growing 10.6% Y/Y and making up 21.6% of total holiday retail sales, which was up from the 20.9% last year and the 20.6% in 2020.

"This holiday retail season looked different than years past," Steve Sadove, senior advisor for Mastercard (MA), said in a statement.

"Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic," Sadove added.

According to Mastercard SpendingPulse, the holiday season ran from Nov. 1 through Dec. 24.

The overall 7.6% rise in holiday retail sales was higher than the 7.1% anticipated by Mastercard (MA) in Sept.

Restaurants put up a strong performance during the holiday season, with sales rising 15.1% Y/Y, helped by continued growth in in-person dining.

"Inflation altered the way U.S. consumers approached their holiday shopping – from hunting for the best deals to making trade-offs that stretched gift-giving budgets," said Michelle Meyer, North America chief economist, Mastercard Economics Institute.

"Consumers and retailers navigated the season well, displaying resilience amid increasing economic pressures," Meyer added.

Comments

[ROLLINGMEADOW]

This is not correct. MC did the same thing last year.

[Dale Roberts]

The credit cards were busy. That said, Americans are still sitting on a generous amount of cash from pandemic savings. That will support a softer landing in the recession. Then it all depends on how long any recession might be.

[ckarabin]

@Dale Roberts But inflation on services will not die until we get a deeper recession and more labor slack, none of which has appeared yet. The longer that COVID savings boost lasts, the longer inflation and high interest rates stick around. Unfortunately we NEED a recession. And the stock market would actually benefit from one since it would be tied to Fed pivot. But without that stiffer recession, no pivot, falling stock prices.

[Dale Roberts]

@ckarabin I agree that a recession and higher rates for longer would be healthy. How much would it take to fix a false economy that has existed for a couple of decades?

[ckarabin]

@Dale Roberts Great point. The immediate imbalance is what bothers me. Govt. spiked spending power to be far beyond what the economy could produce and hence the severe worker shortage. That spending power has to be reduced back by about 3MM jobs worth to restore labor market balance and stop the excess wage hikes. 3MM jobs worth of output is a lot of output! It's about a 2-3% GDP recession. Until that happens, I figure nothing good will happen on inflation, interest rates or the stock market. So bring on that recession, we need it pretty badly!

[Val126]

Sales up, volumes down aka inflation

[typecheck]

To those of you who are holding on to your short positions, this number may not mean much. So don't worry. However, if any of you visited a shopping mall today, you will realize how packed these malls are. It is insanely busy. People are spending and yes, inflation hurts but people, including me, are spending like crazy.

[ckarabin]

@typecheck If the malls are insanely busy, then why does the hard data say that real inflation adjusted volume of sales was dead flat?

[typecheck]

@ckarabin Inflation adjusted sales is flat but isn't that a good news?
It means that everything is normal. There is no overheating economy to drive inflation even higher. There is no depression where consumption has fallen into a pit.

[Taylorwest]

@ckarabin malls are heated, could that be the reason they are busy?

[NYTEX Energy]

I must confess to paying $28 plus tax and tip for three chicken enchiladas; but only because my daughter booked the restaurant. Trust me; there won’t be a second visit.

[Anthonyhai2003]

Wait until those Christmas sales getting returned in the following weeks, shoppers' remorse, then the real number adjusted for inflation, tells the true story.

[vavemula]

@Anthonyhai2003 agreed. I returned half of the items I bought

[ckarabin]

@Anthonyhai2003 Why would you think that returns would be substantially greater this year than any other year?

[Anthonyhai2003]

@ckarabin not saying it would be greater, but waiting for those data to be accounted before calling it.

[Wapiti19]

Not RIG…Real Internal Growth.
Remember …there’s no inflation per Biden

[Seeking more alpha than you]

@Wapiti19 some very strong RIG.

[firsTraveler]

Unless this is actual inflation adjusted sales were flat at best.

[darnoc111]

@firsTraveler They have to be down big as inflation and taxes ate into sales.

[Seeking more alpha than you]

@firsTraveler sales were up.

[ckarabin]

@Seeking more alpha than you equal only to inflation

[OverTheHorizon]

Online retailers broke even—bricks & mortar not nearly:

“American shoppers also displayed a growing preference for shopping online, with online sales growing 10.6% year-over-year and ecommerce making up 21.6% of total retail sales, up from 20.9% in 2021.“
CNN Buisness

[Virtue16]

Pretty sure these figures are highly skewed by the fact that people short on money are using credit more often, even though this study implies it includes cash transaction. Not sure that retailers share these figures with full disclosure with outside credit facilitators.

[Russell's Decalogue]

@Virtue16 You may well have a point in there which could later be confirmed by credit card usage reporting. But this report itself doesn't, as you claim, imply anything about where people came up with the cash. It reports on money spent, but can do no more, nor does it pretend to.

[my_symphony2003]

less than inflation rate, in other words.

[Jim Kimmelman]

@my_symphony2003 +.5% adjusted for inflation.

[ckarabin]

So minus inflation, sales were flat. And that is while consumers were still drawing savings rate down to an unsustainably low 3% and soaring credit card balances. Now what happens to flat inflation adjusted consumption when consumers inevitably cut spending 3% to rebuild savings and stop increasing credit card balance? Answer: more serious recession

[DrewMcVay]

Hopefully they didn’t count the fact I booked 8 flights just to fly on 2, only to get refunded for 6 flights in the future, since there is no one to contact currently without waiting in a line of 856 people and one person waiting on them.

[wboz]

@DrewMcVay that some great GDP numbers in the making there, drew! :D

[javkoza]

@DrewMcVay
The fact that you actually got refunded by airlines is a miracle!
Did you get actual money back or some type of voucher?
My sincere congratuations

[Jim Kimmelman]

@wboz booking a flight does not account for GDP. Its a prepaid revenue.

[AlphaMove]

To those complaining that inflation accounts for the number, it doesn’t matter. Stock prices will also go up on a nominal basis. I’m backing up the truck on stocks as a hedge against inflation and enjoy when companies report record revenues for Q4 and into next year.

[436349]

@AlphaMove Be careful. Inflation maybe bumping Revenue figure but PPI increasing Costs of Goods Sold (at about same rate).
Double edge sword…
https://www.bls.gov/ppi/

[Seeking more alpha than you]

@AlphaMove they will continue to complain because they see everything negatively.

[RustyRanchero]

The consumer debt is going to be out of this world in the next year. Lord have mercy.

[ckarabin]

@RustyRanchero And savings rate approaching zero.

[mobyss]

Inflation near 8%, total dollars spent up around 8%, actual amount of stuff purchased basically flat. Wow.

[Logan Kane]

Wages up 5%

[ckarabin]

@Logan Kane What? You see a problem? (LOL!) Wages up 5%, spending up 8%?!

[Mark Krieger]

sales are actually down, if you take into consideration the impact of inflation

[Jim Kimmelman]

@Mark Krieger its +.5% adjusted

[MoneyMaker5o1]

What recession, economist are idiots

[Gruss_Gott]

@MoneyMaker5o1 hey, they've called 5 of the last 3 recessions so they must know something!

[Phil Dumfee]

Sales increase due to 8% inflation. Actual sales down. Massive sales of extra junk after Christmas that was left on boats from Chiba last year.

[Russell's Decalogue]

@Phil Dumfee Inflation through November was 7.1%. Thus, actual sales up.

Flat, really. Sales up or down a mere 0.4 or 0.5% over a full year are stalled.

[Michael Dolen]

@Phil Dumfee inflation or not, more money for card processing companies.

[Seeking more alpha than you]

@Phil Dumfee actual sales were up.