Americans spent more in the 50 days before Christmas than analysts had expected -- the sharpest annual increase since 2006. It's the surest sign yet they're becoming less frugal.
Normally in January, shoppers recover from their holiday splurges by curtailing their purchases. Not likely this time. Economists say the tax cuts approved by Congress, a rising stock market, a slow but steady rise in hiring and banks' growing willingness to lend will sustain shoppers' spending.
"I don't think consumers are going to suffer a hangover after Christmas," said Mark Zandi, the chief economist at Moody's Analytics. "They are going to hang tough and spend more aggressively in 2011."
Zandi thinks consumer spending will rise 3.6 percent in 2011, twice as fast as in 2010. That would propel the economy to grow about 4 percent, up from the 2.8 percent Zandi expects for 2010.
The stronger growth should lead companies to add 2.9 million jobs this year, up from 1.1 million jobs projected for last year, Zandi said. That would drop the unemployment rate to 9 percent for all of 2011, down from an average 9.5 percent rate for 2010, he said.
Excluding auto sales, holiday shopping in the 50 days before Christmas totaled $584 billion, according to MasterCard SpendingPulse. That's 5.5 percent more than last year -- the highest year-over-year jump on records dating to 2006.