Americans picked up their spending in December during the pivotal holiday season even as they continued to confront high interest rates and steeper prices for everyday goods.
Retail sales, a measure of how much consumers spent on a number of everyday goods including cars, food and gasoline, rose 0.6% in December, the Commerce Department said Wednesday. That is above both the 0.4% gain projected by Refinitiv economists and the revised 0.3% increase recorded in November.
Excluding the more volatile measurements of gasoline and autos, sales still climbed 0.6% last month.
The December advance is not adjusted for inflation, meaning that consumers may be spending the same but getting less bang for their buck.
SILVER LINING OF HIGHER INTEREST RATES: SAVINGS ACCOUNT RATES
Consumers continued to spend at car dealers, grocery stores, building material and garden supply stores and clothing stores. They also continued to open their wallets when online shopping, with spending at non-store retailers jumping 1.5% from the previous month.
However, Americans pulled back their spending at gas stations, health and personal care stores, electronics and appliance stores and furniture stores. Spending was flat at bars and restaurants, a bellwether of discretionary spending.
STUDENT LOAN REPAYMENTS COULD SLAM BIG-NAME RETAILERS THIS FALL
Sales rose in eight of 13 retail categories last month.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
A solid job market and big wage increases have helped to buoy consumer spending in recent months, despite high inflation. However, many economists have been predicting that consumers will grow more cautious as student loan payments resume and high interest rates continue to work their way through the economy.
On top of that, more Americans are relying on their credit cards to cover necessities.
Credit card debt surged to a new record in the third quarter, while delinquencies are also on the rise.
Still, the stronger-than-expected data suggests that the consumer remains strong heading into 2024, despite a number of economic headwinds.
This is a developing story. Please check back for updates.