Holiday sales really were good

No wonder the malls were jammed - the 50-day period between Nov. 5 and Dec. 24 saw a 5.5 percent increase in sales compared with a year earlier, according to MasterCard SpendingPulse. In 2009, sales were up 4.1 percent and in 2008 - arguably the worst stretch of the recession - they fell 6.1 percent. Other reports are due out in the next few weeks, including monthly chain stores sales, U.S. retail sales, and quarterly financial results. From the WSJ:

During the holiday season, clothing posted the strongest gain, up 11.2% over the same period last year when apparel sales were roughly flat. Electronics sales rose only 1.2% this year, as a glut of televisions drove prices down and shoppers shied away from innovations such as 3D TVs. After several years of lackluster sales, jewelry was a standout category notching an 8.4% sales gain.

Now comes the bigger question: What happens in 2011? Not all the signposts are encouraging - higher gas prices could put a drag on the recovery, and a big increase in cotton prices is likely to be passed onto consumers.

Andrew Tananbaum, chief executive of Capital Business Credit, which finances small and medium-sized manufacturers, predicts that the wholesale price of items with "high cotton content" will likely rise at least 10% for goods that consumers will start to see in the summer of 2011. The increase marks the first time apparel will be inflationary in at least 20 years. Retailers will likely take a between 3% and 5% hit on margins for cotton-heavy products to avoid raising prices too drastically, he said.