"We've seen the labor market has been rather solid", said Satyam Panday, senior economist at S&P Global.
The NRF credited the sales numbers to the 17-year low unemployment, increase in income, strong consumer confidence and the healthy stock market for shoppers' willingness to open their wallets.
Retail trade sales were up 0.3% from November 2017, and were up 5.6% from previous year. After some analysts and industry experts panned Macy's business plans and questioned its ability to compete, the company's shares have been steadily climbing in recent months, rising more than 50 percent since early November.
Both December's increase in retail sales and the strong upward revision to November data strengthens economists' expectations of an acceleration in consumer spending for the fourth quarter.
Holiday sales grew in every retail sector except sporting goods, according to the National Retail Federation.
"Whether they shopped in-store, online or on their phones, consumers were in the mood to spend, and retailers were there to offer them good value for their money".
"We aren't sure who gets the credit for the strongest advance in consumer spending since 2010, but it is likely tied in part to the massive tax cuts from Washington and perhaps the Fed's easy money too-low interest rate policy for this stage of the business cycle with the economy in its ninth year of expansion from the end of the recession", said Chris Rupkey, chief financial economist at MUFG Union Bank in NY, in a note to clients Friday.
Philadelphia shoppers mirrored national patterns, according to a report by First Data, which processes about 40 percent of card transactions in the U.S.
Not all categories of retail fared well in December.
In December, U.S. retail sales increased as households purchased a range of goods and the figures for the month prior were revised higher, which indicates the economy entered 2018 with strong momentum. Consumers pulled back spending at department stores last month, with sales dropping 1.1%. Fluctuations in sales often reflect changes in gas prices, not volume.
The Dow Jones Retailers Index was up 1.5 per cent yesterday afternoon, led by jumps in the stock prices of Amazon.com Inc, Target Corp and Wal-Mart Stores Inc, among others. A gallon of regular gasoline cost $2.48 on average in December versus $2.56 in November, according to the U.S. Energy Information Administration. Retailers closed a record 7,000 USA stores a year ago, while dozens of big-name companies, including Gymboree, RadioShack and BCBG Max Azria, filed for bankruptcy.