Retail sales up 0.6% as strong job market helped to fuel strong holiday sales season

NEW YORK — Americans increased their spending even more than expected in December, ending the holidays and the year on an optimistic note.

According to the Commerce Department, retail sales rose 0.6% in December, up from a 0.3% increase in November.

Sales at stores selling general merchandise increased 1.3%, while sellers of clothing and accessories saw sales increase 1.5%. Online sellers posted an increase of 1.5%. The furniture and home furnishings companies experienced a decline of 1%, due to a challenging housing market.

Economists had expected consumers to cut back on spending in the last three months of the year as credit card debt and delinquencies would rise and savings would fall. While consumers continue to face higher borrowing costs, stricter credit standards and higher prices, spending is being driven by a strong labor market and rising wages.

Inflation has cooled significantly from its peak of 9.1% in mid-2022, but costs could still soar. Higher energy and home prices boosted headline U.S. inflation in December, a sign that the Federal Reserve’s push to push inflation back to its 2% target is likely to remain a bumpy road.

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AP Economics writer Paul Wiseman in Washington contributed to this report.