Sales excluding autos, gas stations and restaurants jumped to $471.5 billion for November and December, according to the National Retail Federation. Those figures slightly beat NRF's own forecast of 3.8% growth. Early in the season, industry watchers were more restrained in their expectations for the season. But deep discounts and carefully crafted marketing campaigns lured customers, many of whom splurged on themselves.
"The right mix of strong promotions, lean inventories and an emphasis on value put retailers in the perfect position to end the year on a high note," said Matthew Shay, president-CEO at NRF. "A better-than-expected holiday season is welcome news for an economic recovery that continues to be sluggish, and demonstrates retail's powerful role as an engine of growth."
December retail sales released today by the U.S. Commerce Department show total retail sales, including autos, gasoline stations and restaurants, increased 6.2% year-over-year. Last month the U.S. Commerce Department reported a 6.8% jump in November sales, year-over-year.
"In a matchup between the final two months of 2011, November clearly wins, but in the end, retailers' promotions struck the right chord for budget-focused holiday shoppers," said Jack Kleinhenz, NRF's chief economist. "Though we are seeing evidence that the economy still has a critical hold on consumers' purchase decisions, this strength in spending could continue into 2012."
Others aren't quite so optimistic.
"Consumers pulled out all the stops to have a decent holiday season, but we're seeing the momentum from that dropping off," said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, N.C. "We suspect the rate of consumer spending will slow."
Even as retailers benefited from a weekend Christmas holiday -- and many opened locations for extended hours -- heavy discounting was still the norm. Retailers such as Macy's began discounting early in the holiday-shopping season to ensure consumers shopped for gifts amid slower wage gains and lower property values.
Clothing and sporting-goods retailers saw a strong 7.9% sales gain year over year, while electronics retailers reported a 0.5% decline. Sporting goods, hobby, book and music stores saw sales increase 3.1%, while sales at furniture and home furnishings stores rose 5.7% year-over-year.
-- With contributions from Bloomberg News