U.S. holiday sales rose 3.8 per cent from last year, a major retail trade organization said Tuesday, spurring optimism that the U.S. recovery would be underpinned by healthy consumer spending.

The National Retail Federation said Tuesday that combined retail sales for November and December were $601.8 billion US.

The trade group noted a strong rise in online shopping and said non-store holiday sales grew 9.3 per cent to $95.7 billion.

At the last minute, shoppers shrugged off the effects of bad weather to take advantage of deep discounts at the malls, the federation said.

Competitive sales landscape

Major U.S. retailers such as American Eagle and Pier 1 Imports have cut their profit outlooks because of the extremely competitive sales environment before Christmas.

The Commerce Department released U.S. sales figures for the month of December on Tuesday, showing a total retail sales rise of just 0.2 per cent from the previous month.

That was above expectations, but the Commerce Department also revised November sales downward from a  0.7 per cent rise to a 0.4 per cent rise.

Core retail sales, excluding autos and gasoline, rose by a strong 0.6 per cent in December, with more clothing sales and a jump in spending on food and beverage. However, electronics sales were down for the second straight month.

The U.S. fourth quarter is shaping up better than anticipated, according to TD senior economist James Marple.

Predictions for GDP growth

“While the downward revision tempers some of the optimism on consumer spending in the fourth quarter, the acceleration in core retail sales in December is encouraging, especially given the spate of other indicators which have pointed to a slowdown,” Marple wrote in a note to investors.

Marple predicts U.S. fourth quarter GDP growth could come in at three per cent, with  real GDP growth likely to average 2.7 per cent over the course of 2013.

That would auger well for 2014 and could lead to further cuts in the Federal Reserve’s stimulus plan that calls for it to purchase $75 billion of U.S. bonds every month.

The National Retail Federation holds its annual convention in New York. One of the pressing problems facing the industry is how to thwart cybercriminals, such as the group that stole data on 70 million customers from Target.

Neiman Marcus also reported a breach.

Security a looming issue

Brian Monette, a security expert with Armed Data, said there are bound to be more breaches as retailers handle more data and criminals become more clever.

“With the mass of data they’re collecting and the current ways they manage the data, that’s going to be the case,” he said in an interview with CBC’s The Lang & O’Leary Exchange.

“Any time there is a touchpoint where information is shared between you and third party, it’s subject to being captured,” Monette added.

He said companies should be implementing higher standards and instructing employees on the risks for data stored on cellphones or USB devices.