Despite Supply Issues and Omicron, Holiday Sales Rise 8.5%

One spending measure shows that holiday sales rose at a faster pace than in 17 year, even though shoppers had to deal with increased prices, reduced product availability, and the emergence of a COVID-19 variant.

Mastercard Spending Pulse reports that holiday sales have increased 8.5% over the previous year. Mastercard SpendingPulse was expecting a 7.4% rise.

Purchases of jewelry and clothing were the main drivers behind these results.

Comparatively to the holiday period before pandemic 2019, sales for holidays rose 10.7%.
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Clothing rose 47% by category while jewelry increased 32% and electronics rose 16%. Online sales increased 11% compared to a year earlier and by 61% compared with 2019. A 21% rise in sales at department stores was recorded over 2020.

A broader picture will be revealed next month when the National Retail Federation, the nation’s largest retail trade group, comes out with its combined two-month results in mid-January. These results will be calculated using the Commerce Department’s November and December sales data. Analysts will be analyzing the financial results of different retailers for fourth quarter, which are due to be published in February.

In general, analysts expected strong holidays, thanks to early holiday shopping which started in October, in anticipation of product shortages. The holiday celebrations are also being celebrated by consumers, despite a weak one last year. The slowdown in November retail sales was due in part to the earlier shopping. Many Americans are now having to cancel holiday plans because of omicron virus, the most prevalent version in the United States.

In December, The National Retail Federation announced that holiday sales had exceeded its previously record-breaking forecasts of an increase in sales by 8.5% to 10.5% over the previous year. In 2020, holiday sales rose 8.2% as shoppers who were not able to work during the initial part of the pandemic opted for pajamas and other home products online.

According to the group, online sales and non-store sales will rise between 11%-15%. This excludes automobile dealers and gasoline stations as well as restaurants. According to the study, holiday sales saw an average increase of 4.4% in the last five years.

NRF delivered the update in December right as omicron began to pose a greater threat to the U.S., disrupting businesses such as restaurants and Broadway theatres. But overall store traffic hasn’t taken a plunge, though some stores are reporting dips in big city locations. Sensormatic Solutions reported that store traffic increased by nearly 20% over the previous year, but was down 23% from the prior pandemic year. Peter McCall, Sensormatic’s senior manager of retail consulting, noted shoppers are still going to retail stores but are now favoring open-air shopping centers and outlet malls more than enclosed shopping centers.

Retail sales continue to increase in an economy that has hurt some retailers. Many businesses have had to raise their pay in order to keep and find workers. It has made it more expensive to do business. The US ports were still jammed so they had to scramble to get stock on shelves.

Nevertheless, Americans also proved their resilience in different ways. They paid more across the board for necessities like food and gas, putting pressure on holiday shoppers’ budgets. The consumer price index rose by 5.7% last year. That’s the fastest rate of inflation in 39-years. Americans face a lot more pressure with holiday shopping season underway. Commerce Department announced the November price increase on Thursday. This follows a 5.1% inflation rate for October’s 12 months. It continues a streak of annual price rises that has been higher than the Federal Reserve’s 2% target.

Americans have also learned to cope with product shortages by looking for alternative products or other avenues like eBay.

Walmart and Target promised stock shelves to accommodate the holiday but supply restrictions seem stubborn. Brian Cornell, Target’s CEO, recently stated to The Associated Press that clearing supply chain clogs will take many years.


Marty Crutsinger (AP Economics Writer) contributed to the Washington Report.


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