While the growth rate has slowed, spending has remained strong due to strong job growth and strong wage gains.
Early data shows Americans are increasing their spending this holiday season despite ongoing inflation. This is a huge relief for retailers who spent much of the year fearing that the economy would soon weaken and consumer spending would fall.
According to data published by Mastercard on Tuesday, retail sales increased by 1 percent between November 24 and December 3,1 compared to the same period last year. The credit card company's figures are not adjusted for inflation.
Spending increased in many categories; Restaurants experienced one of the biggest increases with 7,8 percent. Apparel rose 2,4 percent and groceries also gained.
Holiday sales figures driven by a healthy labor market and wage increases indicate that the economy remains strong. The Federal Reserve's campaign to rein in high inflation by raising interest rates over the past few years has slowed the economy, but many economists believe a so-called soft landing is imminent.