The data: US retail spending from November 1 to December 24 rose 3.8% YoY, per Mastercard SpendingPulse, excluding auto sales.

• Ecommerce sales were up 6.7% YoY, while in-store sales increased 2.9%.
• Restaurant spending led the gains, jumping 6.3% YoY, along with goods categories such as jewelry (4.0% YoY), electronics (3.7% YoY), and apparel (3.6% YoY).
• Department stores continued to struggle: Sales rose just 1.6% YoY.

The trends: A fuller picture of the holiday season will emerge after the new year, once data includes the critical post-Christmas week. However, the early results reflect the trends leading up to Q4: Consumers are willing to spend, but they’re increasingly focused on value—an amalgam of price and quality.

• Those conditions have been a boon to retailers like Walmart and off-price merchants like TJ Maxx and Nordstrom Rack.
• But that sharp focus on value has posed a significant challenge to niche retailers like Party City and The Container Store, which both filed for bankruptcy protection in the days leading up to Christmas.
• Some retailers likely got a post-election boost as consumer sentiment reached its highest value since April 2024 after rising for the fifth consecutive month, per the University of Michigan.
• A sizable segment of consumers also pulled spending forward given concerns that President-elect Donald Trump’s tariffs will cause inflation to spike.
• There’s also a growing split between lower-income consumers and the affluent consumers fueling spending growth. That’s driven companies like Newell Brands, maker of Graco strollers and Oster kitchen appliances, to sharpen their focus on the high-end market rather than driving sales of lower-end products, per The Wall Street Journal.

Our take: A solid economy, combined with some consumers “doom spending” and others growing more optimistic, drove healthy holiday spending growth.

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