Holiday spending grew, erasing worries of a downturn

The decline of pandemic-era savings raised concern about end-of-year shopping.

Consumer spending grew solidly this holiday season, rebuking concerns of a slowdown and reinforcing positive signals about the U.S. economy as it approaches the end of a tumultuous year.

Buying among shoppers rose 3.1% over the holidays compared to the same period last year, according to data released on Tuesday by Mastercard SpendingPulse, which measures in-store and online purchases from Nov. 1 to Dec. 24 across all forms of payment. The data is not adjusted for inflation.

Robust spending during the holidays appears to have dispelled concern among some economists of a decline. Their fears centered on a drop-off in pandemic-era savings and a rise in borrowing rates for consumer loans such as credit cards.

But a significant reduction of inflation over the past year has delivered some relief for consumers. Strong hiring and resilient wage growth have bolstered shoppers, who account for nearly three-quarters of U.S. economic activity.

"This holiday season, the consumer showed up, spending in a deliberate manner," Michelle Meyer, chief economist at the Mastercard Economics Institute, said in a statement.