Americans ramped up spending during the holidays despite some financial anxiety and higher costs

for goods and services, lifting the economy out of a yearlong stagnation,” write Vipal Monga and Sharon Nunn of the Wall Street Journal.

The surge in holiday spending, whether driven by discounts, e-commerce, or stimulus checks, aided a broad swath of the economy, from luxury boutiques to shippers hustling to make deliveries. Retail sales in December surged 5.3% from the month before, and were up 8.3% compared with a year earlier.

The surge in spending is likely to have a positive effect on in the first quarter of 2021, as consumers continue to purchase goods and services. Support from the government stimulus is likely to prop up consumer spending beyond the holidays, even in the face of bleak economic outlook for year as a whole.

In addition, the holiday season spending boost could also be an indicator of rebound for the economy as a whole, and consumer confidence is one of the key drivers of economic performance. Increased spending will also help cushion the impact ofother headwinds, including rising unemployment and increased costs.

Even though the spending surge is expected to slow in 2021, this surge during the holidays, along with other economic stimulus, will likely have a positive effect on the economy in 2021 and beyond. As consumers gain confidence in their finances and the broader economy, they are more able and likely to increase spending on goods and services, which drives economic growth. And as these spending trends continue, the economy will likely begin to climb out of the COVID slump it has been stuck in for a year.