Holiday Sales Rise Despite Supply Issues And Omicron

The holiday sales rose at the fastest pace in 17 years, even as shoppers struggled with higher prices, product shortages and a raging new COVID-19 variant in the last few weeks of the season, according to one spending measure.

Mastercard SpendingPulse reported Sunday that holiday sales had risen 8.5% from a year earlier. Mastercard had expected a decrease.

Purchases of clothing and jewelry drove the results.

The pre-pandemic holiday period had a decrease in sales.

By category, clothing and jewelry both increased. Online sales were up from a year ago. The increase in department stores was 21%.

Some consumers stayed home after omicron hit, but sales stayed strong. Steve Sadove, senior adviser to Mastercard and former CEO of Saks Inc., said he was happy with how the season played out. When people feel a little bit uncomfortable, you will see a pickup in online and a little bit of a slowdown in store performance.

A person shops at a store in Illinois. This file photo was taken in Chicago.

Next month, the National Retail Federation, the nation's largest retail trade group, will release its combined two-month results. The sales figures from the Commerce Department will be used to calculate the results. The fourth-quarter financial results from different retailers will be released in February.

The analysts expected a strong holiday season due to the early shopping that started in October in anticipation of a product shortage. Consumers were determined to celebrate the holidays after a subdued one a year ago. Retail sales slowed in November because of early shopping. Many Americans have had to cancel holiday plans because omicron has become the dominant version of the virus in the United States.

The National Retail Federation said early in December that holiday sales were on track to beat its already record-breaking forecasts for an increase of 8.5% to 10.5% compared to the year-ago period. When shoppers were locked down during the early part of the Pandemic, they spent their holiday dollars online.

The group expects online and other non-store sales to increase between 11 and 15%. The numbers do not include automobile dealers, gasoline stations and restaurants. Over the past five years, holiday sales have averaged gains of 4.4%.

The update from the NRF was delivered in December, before omicron became a bigger threat in the U.S. Some stores are reporting a decline in traffic in big city locations. Store traffic was up 20% from a year earlier, but down 23% from the same week in the pre-pandemic year of 2019. Shoppers prefer open-air shopping centers and outlet malls over enclosed shopping centers, according to Sensormatic's senior manager of retail consulting.

Customers wait in line to checkout during a Black Friday sale at Macy's. The photo was taken byDarron Cummings.

Retail sales have continued to rise in an economic environment that has hamstrung some retailers. Many businesses have had to increase pay to find and keep workers. They had to fill shelves with U.S. ports still backed up.

Americans proved their resilience in different ways. They paid more for necessities like food and gas, putting pressure on holiday shoppers' budgets. Consumer prices rose 5.7% over the past year, the fastest pace in 39 years, as a surge in inflation confronts Americans with the holiday shopping season under way. The Commerce Department said Thursday that the November increase was the second in a row and followed a 5.1% rise for the 12 months ending in October.

Americans learned to adjust to product shortages by turning to alternatives, like eBay, or looking for their top brands at other places.

Target and Walmart promised stocked shelves for the holiday, but supply constraints appear to be stubborn elsewhere. Target CEO Brian Cornell believes it will take several years for supply chain problems to be solved.

AP Economics Writer Marty Crutsinger contributed to the report.