As predicted by economists, consumers spent big during the 2021 holiday season with retail sales up 14.1% year over year. The growth beat the 10.5% estimate made in October by the National Retail Federation.
Sales, excluding auto and restaurants, totaled $886.7 billion, with online sales comprising 24.6% of the total. Online sales totaled $218.9 billion, up 11.3% from the prior year.
“We closed out the year with outstanding annual retail sales and a record holiday season, which is a clear testament to the power of the consumer and the ingenuity of retailers and their workers,” NRF President and CEO Matthew Shay said. “Despite supply chain problems, rising inflation, labor shortages and the omicron variant, retailers delivered a positive holiday experience to pandemic-fatigued consumers and their families.”
Shay said consumers were backed by strong wages and record savings and began their shopping earlier this year than ever before.
“The numbers are clear: 2021 was an undeniably outstanding year for retail sales,” Shay added.
The holiday sales reported by NRF are from Nov. 1 and Dec. 31, 2021. December sales were down 2.7% from November, but were up 13.4% from December 2020. As of December, sales were up 13% unadjusted year-over-year on a three-month moving average, NRF reports.
“Retail sales displayed solid momentum throughout the holiday season,” NRF Chief Economist Jack Kleinhenz said. “Worries about inflation and COVID-19 put pressure on consumer attitudes but did not dampen spending, and sales were remarkably strong. Even though many consumers began shopping in October, this was the strongest November and December we’ve ever seen.”
Kleinhenz said holiday spending during 2021 reflected continued consumer demand that is driving the economy and should continue in 2022.
“Nonetheless, we should be prepared for challenges in the coming months due to the substantial uncertainty brought by the pandemic,” he added.
Inflation helped to fuel consumer spending totals with the Consumer Price Index increasing 7% in December reflecting the rising cost of goods during 2021. The U.S. Department of Commerce said the 7% index reading in December was the largest 12-month increase since the period ending June 1982. Excluding food and energy, the index rose 5.5%, the largest 12-month change since the period ending February 1991. The energy index rose 29.3% over the last year, and the food index increased 6.3%.
The U.S. Spending Momentum Index (SMI) had a reading of 108.4 in December, according to Visa. The monthly reading was 110.3 for the three months ending December. Visa said the SMI rises above 100 consumer spending momentum is strengthening.
Wells Fargo Securities economists said inflation is intensifying and consumer activity is cooling as 2022 gets underway. The NFIB Small Business Optimism Index edged up to 98.9. Industrial production slipped 0.1%, as supply constraints held down manufacturing production. Consumer sentiment fell to 68.8 in January, the first solid sign that the Omicron surge is weighing on economic activity, Well Fargo economists reported Jan. 14.
Following are the holiday retail sales growth by category, according to NRF.
Clothing and clothing accessory stores, up 33.1%
Sporting goods stores, up 20.9%
General merchandise stores, up 15.2 %
Furniture and home furnishings stores, up 15%
Electronics and appliance stores, up 13.8%
Building materials and garden supply stores, up 13.5%
Online and other non-store sales, up 11.3 %
Health and personal care stores, up 9.6 %
Grocery and beverage stores, up 8.6%