“Household emotions likely played into holiday economic decisions as consumers wanting to offset the anxiety and stress experienced during 2020 spent on gifts to enjoy a better-than-normal holiday,” Kleinhenz said

“Household emotions likely played into holiday economic decisions as consumers wanting to offset the anxiety and stress experienced during 2020 spent on gifts to enjoy a better-than-normal holiday,” Kleinhenz said

Record holiday season retail sales during the last two months of 2020 reflected the recovering economy but also got a boost from consumer emotions after a stressful year, an economist has said.

"This was not a typical holiday season and it took place amid an unprecedented shopping landscape," National Retail Federation (NRF) chief economist Jack Kleinhenz said. "When we assembled our 2020 holiday forecast, we knew one scenario was that results could come in high and that sales might exceed the forecast."

Kleinhenz said there was a "push and pull" between excitement over the holidays and worries over a resurgence in Covid-19 cases. But consumers' ability to spend was boosted by government stimulus checks received earlier in the year and money saved by not traveling, dining out or attending entertainment events. Rising home values and stock prices also provided support for holiday spending while the availability of Covid-19 vaccines helped ease worries over the virus and state restrictions on activity. Nonetheless, millions of Americans remained out of work and others were working fewer hours.

Kleinhenz cited English economist John Maynard Keynes' observation that consumer behavior can sometimes be governed by "animal spirits" rather than rational motivation, resulting in fluctuations in the economy.

"Household emotions likely played into holiday economic decisions as consumers wanting to offset the anxiety and stress experienced during 2020 spent on gifts to enjoy a better-than-normal holiday. This was clearly a year when animal spirits outweighed conventional wisdom."

The latest edition of NRF's Monthly Economic Review, notes 2020's US$789.4bn in holiday spending during November and December was the highest on record despite the coronavirus pandemic. The season's 8.3% growth over the same period a year earlier was the highest holiday growth rate in records going back to 2002 – beating since 6.8% in 2004 – and more than double the 3.5% average of the previous five years, including 2019's 4% gain.

The results easily exceeded NRF's holiday forecast, which cited economic indicators such as growing employment and wages to predict that holiday sales would increase between 3.6-5.2% over 2019 to between $755.3bn and $766.7bn. The numbers exclude automobile dealers, gasoline stations and restaurants to focus on core retail.

The holiday spending total includes online and other non-store sales, which were up 23.9% at $209bn as consumers shopped more online whether they made their purchases from pureplay online sellers or traditional retailers' websites. That compared with 14.7% growth in 2019 and represented 26.5% of total sales during the holiday season.

Kleinhenz called online holiday sales "a standout" that showed how retailers had innovated during the pandemic. Even as it became too late for reliable delivery of online orders in late December, many consumers still ordered online but took advantage of in-store and curbside pickup services retailers had perfected over the previous several months.