Retailers enjoyed a very strong holiday season, with sales up nearly 11% compared to the holiday season two years ago, a report from Mastercard shows. The report, titled Mastercard SpendingPulse, showed an 8.5 percent increase in retail sales during the holiday season, defined as Nov. 1 to Dec. 24, over last year. Despite the Omicron variant and inflation, the strong sales were fueled by several factors, one of which was pent-up consumer demand. It will be fascinating to observe if the encouraging retail trends carry on into the new year.

Both online and in-person sales were up this year compared to 2019, with e-commerce sales increasing 11%, and in-person sales up 8.1%. This holiday season saw a significant jump in online shopping, as e-commerce sales increased over 61%.

Broadly, online sales accelerated during the 2021 holiday season, with e-commerce making up about 21% of all retail sales, according to the Mastercard report. This represents an increase from e-commerce making up 14.6% of sales in 2019, in a possible sign of the pandemic’s effects on our habits.

Despite early fears of late-arriving gifts due to supply chain disruptions, The New York Times cited a ShipMatrix report that most holiday gifts “arrived on time or with minimal delays,” partially because of the uptick in holiday shoppers purchasing their gifts early.

Greg McBride, chief financial analyst for Bankrate.com, tells Newsmax Finance, “Consumers started spending early and often. Supply chain shortages got the holiday shopping season started earlier as shoppers worried about items being out of stock or not arriving in time. Even with the emergence of omicron, consumer spending was surprisingly robust, but consistent with the economic expansion and low unemployment.”

'Revenge Spending'

McBride additionally notes that one item to watch is holiday debt, as both surveys and the data show credit card debt increasing this time of year. “If there’s one time a year when households let loose, it’s the holiday shopping season. I think 2021 is that and then some because of so-called revenge spending, as consumers savor some semblance of normal holiday get-togethers and traditions. But, remember interest rates are going to rise in 2022, and that debt being added now is going to cost more as 2022 unfolds. Prioritizing re-payment of high cost credit card debt is something households should be doing as an interest rate increase nears,” McBride says.

McBride adds: “One thing worth watching is how consumer spending on services holds up in the first quarter of 2022, given the rapidly spreading omicron variant?”

Only time will tell.