Image: A woman shops at a store in a mall in Washington
Jewel Samad  /  AFP - Getty Images
Spending was strong since the start of the holiday shopping season in November and the momentum continued through Christmas Eve, a surprising sign of strength for the economy.
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updated 12/27/2010 7:33:57 PM ET 2010-12-28T00:33:57

Forget the returns line. People hit the stores after Christmas to buy, indulging the rediscovered retail appetite that may have made 2010's holiday shopping season the biggest ever.

Revenue for the holiday season is on track to grow at its strongest rate since 2006. Total spending for November and December could exceed 2007 sales — the best season on record. This despite an uncertain economy and a rise in thrifty habits.

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Shoppers spent more on their family and friends and for the first time since before the Great Recession, treated themselves and even their pets. And after Christmas, even an East Coast blizzard didn't kill the mood as they headed to stores armed with gift cards and eyeing a new crop of discounts.

Mall of America's spokesman Dan Jasper reported Monday that shoppers are doing more buying and less returning this week than a year ago.

"People are definitely treating themselves," particularly to jeans and accessories, he said.

Shoppers spent more across the board this holiday season. Clothing sales rose 11.2 percent. Jewelry and luxury goods showed strong single-digit gains compared with a year ago, though they've not returned to pre-recession levels, according to data released late Monday by MasterCard Advisors' SpendingPulse.

Total consumer spending excluding autos, rose 5.5 percent to $584.3 billion from Nov. 5 through Dec. 24, compared with the same 50-day period a year ago, according to SpendingPulse.

That marks the biggest increase since 2007, when revenue rose 4.9 percent. Total sales surpassed 2007 holiday spending, which reached $566.34 billion, though the figures aren't adjusted for inflation.

"In 2008, stores were knocked down. In 2009, they found some stability, and in 2010, they took a step forward toward growth," said Michael McNamara, vice president of research and analysis for SpendingPulse, which tracks spending across all transactions including cash.

Spending was strong since the start of the holiday shopping season in November and the momentum continued through Christmas Eve, a surprising sign of strength for the economy. Consumer spending accounts for about 70 percent of U.S. economic activity.

People spent more even as they held on to frugal habits learned during the Great Recession, from focusing on big bargains to paying with cash. That conservative shopping mentality was clear as shoppers rummaged through clearance bins at stores and malls this week.

"I don't want to go any deeper into debt," said Dana Hall, 36, who arrived at Atlantic Station, a downtown shopping complex in Atlanta, on Sunday while killing time before picking up a passenger at the city's airport. Hall said he had kept his job throughout the recession, but the economic troubles turned him into a cash-only shopper.

Stores headed into the season with angst that they would have too much inventory. That's because they placed most of their orders in the spring when the economic recovery looked stronger than it seemed later in the year.

But stores struck the right notes to get careful holiday shoppers to buy more. They rolled out discounts starting in late October to cater to shoppers who wanted to stretch out their buying.

Merchants called it right in anticipating that gift givers would scrimp less and buy nicer, more traditional presents, like sweaters rather than pots and pans and other utilitarian gifts that were popular the last two years.

Free shipping was practically a given for online sales, which rose 15.4 percent, according to SpendingPulse. Stores stayed open later and some pulled all-nighters.

Story: Attention shoppers: Best after-Christmas sales

Americans didn't have to carelessly spend to make merchants happy. If every household bought one extra gift, that collective effect boosts retail sales.

The National Retail Federation predicts spending this holiday season, Nov. 1 through Dec. 31, will reach $451.5 billion, up 3.3 percent over last year. That forecast was upgraded earlier this month based on a robust November. That would be the biggest increase since 2006, and the largest total since a record $452.8 billion in 2007. The NRF forecast excludes revenue from restaurants, gas, autos and only looks at online sales from physical stores.

Strong after-Christmas sales could make this year the biggest holiday sales period of all time. After-Christmas sales make up about 15 percent of holiday sales. The blizzard cut some stores' hours Sunday and Monday, but some analysts think shoppers will be undeterred given the new resiliency they have shown this season.

Story: Consumers' holiday splurge may be just that

"The storm is more of a nuisance. So some consumers will put off their shopping for day or two, but by and large, stores will be able roll past this storm without too much concern," said Madison Riley, a strategist at Kurt Salmon Associates, a consulting firm.

Taubman Centers had to close four of its 26 malls early on Sunday, but spokeswoman Karen MacDonald said those that were open were much busier with new sales than with gift receipts. Based on a sampling of stores at a number of malls, 80 percent of the transactions were purchases, while returns and exchanges each accounted for 10 percent, she said.

"There are many people who are off this week; if they don't get out today, we expect a strong and long weekend," MacDonald said. "We feel very good."

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: What's in store for post-holiday shoppers

  1. Closed captioning of: What's in store for post-holiday shoppers

    >>> for those americans not house bound by this blizzard back east, this was a big day to hit the stores. to bring back the estimated 33% of the gifts that get returned every year. and to take advantage of deals. but this year's a bit different as we learn tonight from nbc's john yang in chicago.

    >> reporter: for retailers this year, it's been a holiday shopping season to cheer about.

    >> this year we saw very big increase in sales overall. so it's all good news.

    >> reporter: according to early estimates, spending was up as much as 5.5% over last year. and online shopping continued to show strong growth, up a whopping 15.4%.

    >> we're seeing positive growth for the first time in almost three years. and not since 2006 have we seen this level of sales.

    >> reporter: what were the hot presents? apparel up more than 11%. jewelry up 8.4%. other luxury items, up 6.7%. stronger holiday sales for retailers and careful inventory management mean fewer post christmas bargains than last year.

    >> i haven't noticed there's many great big sales.

    >> reporter: on the east coast , the blizzard buried hopes that it would be one of the top ten shopping days of the years, but retailers should have no reason to panic. the business lost to the storm will likely be made up later in the week.

    >> when they dig out, retailers should expect those shoppers to be in the stores.

    >> reporter: and retailers hope that sales will pile up along with the snow drifts. john yang , nbc news, chicago.

Explainer: The top 10 business stories of 2010

  • Image: BP CEO Tony Hayward surveys gulf spill repair work
    AP

    In 2010, the economy rebounded fitfully from the Great Recession — starting strong, wobbling at midyear but showing enough vigor by year's end to quell fears of a second recession. Yet Americans hardly felt relief under the weight of high unemployment, which began the year at 9.7 percent and is now 9.8 percent.

    An oil spill devastated the economy and environment along the Gulf Coast and hammered energy giant BP's stock price and reputation.

    China muscled past Japan to become the world's No. 2 economy, a reminder that the global economic order is shifting and America's supremacy is diminishing.

    It was a year of job shortages and swollen budget deficits that disheartened Americans and caused deep losses for incumbent Democrats on Election Day. The Federal Reserve tried with scant success to jolt the economy with record-low interest rates.

    The struggling economy was voted the top business story of the year by U.S. newspaper editors surveyed by The Associated Press. The oil spill in the Gulf came in second, followed by China's economic rise.

  • 1. Economy struggles

    Image: Unemployment brochures are seen on display at the employment training facility, JobTrain, in Menlo Park, Calif.,
    AP

    Climbing out of the deepest recession since the 1930s, the economy grows at a healthy rate in the January-March quarter. Still, the gain comes mainly from companies refilling stockpiles they had let shrink during the recession. The economy can't sustain the pace. The lingering effects of the recession slow growth.

    The benefits of an $814 billion government stimulus program fade. Consumers cut spending in favor of building savings and slashing debt. Businesses hesitate to hire. Cities and states lay off workers. Growth slows through spring and summer.

    Unemployment stays chronically high. In May, the number of people unemployed for at least six months hits 6.8 million — a record 46 percent of all the unemployed.

    Pointing to the deficits, Congress resists backing more spending to stimulate the economy. The Federal Reserve seeks to fill the void by announcing it will buy $600 billion in Treasury bonds to try to further lower interest rates, lift stocks and coax consumers to spend.

    As the year closes, the economy makes broad gains. Factories produce more. Consumers — the backbone of the economy — return to the malls. Congress passes $858 billion in tax cuts and aid to the long-term unemployed. Yet more than 15 million Americans are still unemployed. Economists say a full economic recovery remains years away.

  • 2. Gulf oil spill

    Image: Plaquemines Parish coastal zone director P.J. Hahn lifts his boot out of thick beached oil at Queen Bess Island.
    AP

    An explosion at a rig used by BP kills 11 workers and sends crude oil gushing into the Gulf of Mexico. The spill devastates the fishing and tourism industries along the Gulf Coast and causes environmental damage that may last for decades. BP sets up a $20 billion fund to compensate fishermen, restaurateurs and others whose livelihoods were damaged.

    The oil giant still faces civil charges and a criminal investigation by the Justice Department and lawsuits from hundreds of individuals and businesses. BP's stock market value shrinks by more than $100 billion after the April 20 disaster before bouncing about halfway back.

  • 3. China's rise

    Image: Workers install scaffolding at a construction site as a Chinese national flag flies near by in central Beijing.
    Reuters

    China passes Japan as the world's second-biggest economy. The World Bank says it could surpass the United States by 2020. China's gross domestic product is spread out over 1.3 billion people — amounting to about $3,600 per person. That compares with GDP in the U.S. of about $42,000 per person. In Japan, it's about $38,000 per person. China's thirst for raw materials and other products helps the rest of the world recover from the recession. Still, the U.S. and Europe complain that China gives its exporters an unfair competitive edge by keeping its currency artificially low.

  • 4. Real estate crisis

    Image: Home for sale
    AP

    Housing remains depressed despite super-low mortgage rates. The average rate on a 30-year fixed mortgage dips to 4.17 percent in November, the lowest in decades. But home sales and prices sink further. Nearly one in four homeowners owe more on their mortgages than their homes are worth, making it all but impossible for them to sell their home and buy another.

    An estimated 1 million households lose their homes to foreclosure, even though the pace slows after evidence that lenders mishandled foreclosure documents. Some did so by hiring "robo-signers" to sign paperwork without checking their accuracy.

  • 5. Toyota recall

    Image: Toyota Master Service Technician Mike Blomberg inspects a gas pedal assembly.
    AP

    Toyota's reputation for making high-quality cars is tarnished after the Japanese automaker recalls 10 million vehicles for sudden acceleration and other problems. Toyota faces hundreds of lawsuits alleging that some models can speed up suddenly, causing crashes, injuries and deaths. Toyota blames driver error, faulty floor mats and sticky accelerator pedals for the unintended acceleration. The uproar damages its business. Toyota's U.S. sales rise just 0.2 percent through November in a year when the industry's overall sales climb more than 11 percent.

  • 6. GM's comeback

    Image: GM headquarters
    AP

    General Motors stock begins trading again. It signals the rebirth of a corporate icon that fell into bankruptcy and required a $50 billion bailout from taxpayers. GM uses some proceeds from its November initial public offering to repay a portion of its bailout. (Washington still holds about a third of GM's stock.) GM's recovery helps rejuvenate the industry. Sales of cars and light trucks rise 11 percent through November compared with the same period in 2009. Shoppers who had put off replacing their old cars return to showrooms.

  • 7. Financial overhaul

    Image: Barack Obama, Christina Romer, Timothy Geithner, Barney Frank, Paul Volcker
    AP

    Congress passes the biggest rewrite of financial rules since the 1930s. The law targets the risky banking practices and lax oversight that led to the 2008 financial crisis. The law creates an agency to protect consumers from predatory loans and other abuses, empowers regulators to shut down big firms that threaten the entire system and shines more light into markets that have eluded oversight. Republican critics say the law goes too far, imposing burdensome rules that will restrict lending to consumers and small businesses.

  • 8. European bailouts

    Image: Athenians walks behind a board showing exchange rates at a foreign currency exchange shop in Athens on Wednesday.
    AP

    Greece and Ireland require emergency bailouts, raising fears that debt problems will spread and destabilize global markets. European governments and the International Monetary Fund agree to a $145 billion rescue of Greece in May and a $90 billion bailout of Ireland in November. The bailouts require both countries to slash spending, triggering protests by workers. Investors fear that debt troubles will spread to Spain, Portugal and other countries, weaken the European Union and threaten the future of the euro as its common currency.

  • 9. 500 million Facebook users

    Image: Mark Zuckerberg
    AP

    Facebook tops the 500-million-user mark. It expands its dominance of social media and further transforms how the world communicates. If it were a country, Facebook would be the world's third-largest. Facebook tightens its privacy settings after criticism that personal information is being disseminated without users' knowledge or permission. Founder Mark Zuckerberg is named Time magazine's "Person of the Year" and is the subject of a high-profile movie about Facebook's creation.

  • 10. iPad mania

    Image: Customer uses an Apple iPad
    AP file

    Apple Inc. unveils the iPad, bringing "tablet" computing into the mainstream and eroding laptop sales. Apple is expected to sell more than 13 million iPads this year. The iPads sell about twice as fast as iPhones did after their 2007 introduction. The price of Apple stock rockets more than 50 percent in 2010. Competitors scramble to try to catch up. They include the Dell Streak, BlackBerry PlayBook, the Samsung Galaxy Tag and HP Slate.

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