Holiday spending is up, another good sign for the economy
ARI SHAPIRO, HOST:
Shoppers aren't holding back this holiday season. Although retail spending is not as rip-roaring as it was last year, the numbers are still up. And that's just the most recent good sign for the broader economy. NPR's Becky Sullivan reports.
BECKY SULLIVAN, BYLINE: During the pandemic, shoppers, flush with cash from stimulus checks, spent more than ever - spending big on outdoor equipment and furniture for home offices all while inflation drove prices higher and higher. So year to year, holiday spending grew by 8 or even 12%. This year, it's back to a very normal 3.1% according to data released Tuesday by Mastercard. And that means it was a good year for shoppers and retailers alike, says Burt Flickinger.
BURT FLICKINGER: Consumers spent, and they spent on practical items - gift cards, food, clothing and shoes and less on electronics this year.
SULLIVAN: Flickinger is managing director at the Strategic Resource Group, a business consulting firm. Consumers didn't go wild spending on expensive things like fancy furniture or jewelry or electronics, he says. Instead, people focused their spending on smaller-scale stuff like new clothes and eating out. Sales at restaurants this holiday season were up by nearly 8% over last year.
FLICKINGER: People had really been well-supplied and not buying big-ticket items. But consumables, whether it's edibles or wearables, really, really led. So it's a practical Christmas, Hanukkah, New Year season.
SULLIVAN: That shoppers have money to spend during the holidays is evidence that the economy is working right now, said Jack Kleinhenz, chief economist at the National Retail Federation.
JACK KLEINHENZ: Consumers are spending at a decent clip, and they've been remarkably resilient this year and surprisingly so because of the resilience that we've seen in the labor market.
SULLIVAN: Unemployment has stayed low, and employers keep hiring. Meanwhile, inflation is slowing down. Prices are only up 2.6% over this time last year, which isn't too far from the Fed's target rate of 2%. That said, there are some yellow flags in this economy. There's the record amount of credit card debt - more than $1 trillion - and millions of people have recently had to start making federal student loan payments again after a long pause during the pandemic. Still, Kleinhenz says he's optimistic. For retailers, 2023 isn't done just yet. The week after Christmas is one of the busiest weeks of the year.
KLEINHENZ: People are - have their gift cards. They're making exchanges. They're looking for sales, and, of course, there's returns that go along with it.
SULLIVAN: All signs point to a solid finish for the year, he says.
Becky Sullivan, NPR News.
(SOUNDBITE OF LEIKELI47 SONG, "MONEY") Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.