Shoppers weren’t entirely tight fisted during the holiday season, despite the ongoing pressure of inflation on household budgets.

U.S. retail sales grew 3.1% this holiday season, according to a Mastercard poll that tracks in-store and online retail sales. Spending on restaurants increased 7.8% from last year, while apparel and grocery-related purchases were up 2.4% and 2.1%, respectively, according to Mastercard. 

Robust consumer spending bodes well for the economy’s present and future, according to Goldman Sachs. 

“We continue to see consumer spending as a source of strength in the economy and forecast above-consensus real spending growth of 2.7% in 2023 and 2.0% in 2024 in Q4/Q4 terms,” economists with the investment bank said in a mid-December report.

Consumers proved more willing to shell out on online purchases compared to in-store purchases, with online sales growing 6.3% this holiday season versus a  2.2% increase in sales at brick-and-mortar stores, Mastercard’s data shows. 

But not all retailers profited from shoppers’ open wallets.

Pockets of worry

Consumers spent 0.4% less on electronics and 2.0% less on jewelry compared to the 2022 holiday season, as price-conscious consumers cautiously embraced seasonal sales, Mastercard’s data shows.  

For many consumers, increased spending over the holidays may also bring more debt. About 2 in 3 Americans say their household expenses have risen over the last year, with only about 1 in 4 saying their income had increased in the same period, according to an October poll from The Associated Press-NORC Center for Public Affairs Research.

The strong holiday shopping turnout reinforces the likelihood the Fed will achieve its goal of so-called soft landing, some analysts say. Even so, some forecasters predict that consumer spending could peter out later next year.

“PNC expects a decline in consumer spending in the second half of 2024 as the U.S. economy enters into a mild recession,” PNC analysts said in a research note. “High interest rates and modest job losses will cause households to turn more cautious. However, there’s still about a 45% probability that the U.S. economy avoids recession and consumer spending growth slows, but does not outright decline.”

The Mastercard SpendingPulse excluded automotive purchases.

Elizabeth Napolitano

Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News’ BizTech Unit and worked on the Associated Press’ web scraping team.