Compared with a year ago, retail sales were also up in nearly every category, with some doing very well indeed. "General merchandise sales (without food or autos) barely moved up, and most of the increase was in non-store retailing", Erik Gordon, professor at the University of Michigan's Ross School of Business, told Retail Dive in an email.
At J.C. Penney, meantime, even an optimistic outlook from CEO Marvin Ellison couldn't buoy the retailer's shares after investors were underwhelmed by the company's 3.4 percent gain for holiday sales. It marked the fourth consecutive month of increase for the industry after a bruising year strewn with bankruptcies and department store closures largely from the shift to online shopping.
"We aren't sure who gets the credit for the strongest advance in consumer spending since 2010, but it is likely tied in part to the massive tax cuts from Washington and perhaps the Fed's easy money too-low interest rate policy for this stage of the business cycle with the economy in its ninth year of expansion from the end of the recession", said Chris Rupkey, chief financial economist at MUFG Union Bank in NY, in a note to clients Friday.
According to the National Retail Federation, holiday sales in the November/December timeframe increased 5.5% over the same period in 2016 to $691.9 billion.
Data on retail sales can be volatile from month to month, aren't adjusted for inflation and don't include spending on most services such as housing and health care.
"The improving labor market, robust consumer confidence and the imminent boost to disposable incomes from the recently-enacted tax cuts suggest that spending will continue to grow at a healthy pace over the first half of this year", said Andrew Hunter, an economist at Capital Economics.
The data in Friday's report "are consistent with the very elevated consumer confidence numbers, and they imply that the saving rate, which is already very low, continues to decline", wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note to clients.
Retailers had their best holiday season since 2010, according to the National Retail Federation, which on Friday reported that sales in the November-December period rose 5.5% compared with the year earlier period.
Receipts at restaurants and bars gained 0.7 percent, the biggest increase seen since January.
Not all categories of retail fared well in December. It's a key gauge for the economy, which derives about two-thirds of its output from consumer spending.
Healthy spending is also a good sign for the economy this year. Fluctuations in sales often reflect changes in gas prices, not volume. Gasoline station sales are up 12.5% since December 2016.
Sales were uneven across other categories last month. A few sectors didn't fare as well: Sales fell 1.6 percent at sporting goods stores and 0.3 percent at clothing stores. Spending was up at furniture sellers, grocery stores and restaurants.