Americans streamed into stores in November and December and spent $601.8 billion over the holidays, a 3.8 percent increase over last year's total for the same period.
The National Retail Federation was right on the money with its prediction last October that retail store sales would rise 3.9 percent and total $602 billion.
Consumers also streamed onto the Internet in November and December and spent an additional $95.7 billion, up 9.3 percent over last year.
Together, in-store and non-store sales, which are an indicator of online and e-commerce sales, totaled $697.5 billion.
Federation president Matthew Shay said holiday spending is a reflection of a beefed-up economy and a healthy dose of consumer confidence.
“Considering that retail sales are an important barometer when measuring the overall health of our national economy, this report provides a level of true optimism that the recovery is picking up steam, and once again, retail leads the way,” Shay said.
Holiday shoppers were looking for bargains and retailers complied, lowering prices, said the Federation's chief economist Jack Kleinhenz.
“Undoubtedly, some of the increase came at the expense of margin,” he said.
But those price cuts may begin to taper off and consumers may be seeing fewer mark-downs as the year progresses.
“As consumer confidence grows, there will be less need for retailers to heavily promote and discount their offerings,” said Kleinhenz.
First Data reported that retail spending spiked 13.2 percent in the final days before Christmas and for the week as a whole. To lure last-minute shoppers, retailers offered extended store hours and piled on the promotions. The strategy also helped retailers avoid being stuck with excess inventory. One of the apparent payoffs -- the average sales receipt rose eight-tenths of a percentage point last month, according to First Data.