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US consumers continued their spending spree in early 2025 following a $1 trillion holiday shopping season, despite challenges from rising interest rates and persistent inflation.
Retail sales during the 2024 holiday season reached $994 billion, marking a 4% increase from the previous year, according to the National Retail Federation. This growth exceeded expectations and outpaced the previous year’s performance.
Major banks also reported higher earnings in the fourth quarter, driven in part by increased consumer activity.
Consumer spending on credit and debit cards issued by top banks like Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo totaled $924 billion in the final quarter of 2024, a 5% increase from the previous quarter.
Analysts noted that consumer spending remained strong at the beginning of the year, with robust growth in various sectors.
Target reported increased revenue from holiday sales of toys and cosmetics, leading to an upgrade in sales guidance for the fourth quarter.
Costco also experienced a significant year-on-year sales increase in December, particularly in non-food categories such as jewellery and toys.
While inflation rates showed a slight decrease in December, consumers continued to seek discounts on products, with retailers offering clearance sales after the holidays.
Despite some households facing financial strain, overall delinquency rates on credit cards remained low at major banks.
Investors were cautious about potential interest rate adjustments by the Federal Reserve, while the inauguration of a new president could impact tariffs and prices in the future.
However, consumer spending remained strong, with companies reporting robust performance and increased consumer engagement.