By Josh Mitchell and Ben Leubsdorf

WASHINGTON -- Americans splurged on cars and online shopping during the holidays, but not much else.

Sales at U.S. retailers and restaurants rose 0.6% in December from a month earlier, capping another year of healthy spending by households that helped extend the economy's long expansion, the government said Friday. Retail sales rose 3.3% in 2016, faster than the prior year's gain of 2.3% but similar to the underlying trend during this expansion.

The holiday shopping season is the most crucial part of the year for retailers, and the final months of 2016 coincided with a booming stock market and a pickup in Americans' wages. Measures of consumerconfidence hit multiyear highs late last year.

Those factors appeared to culminate in a solid holiday shopping season. A separate report Friday from the National Retail Federation, an industry trade group, showed holiday sales rose 4% in November and December compared with a year earlier. The government's report showed a 4.4% retail-sales gain in the final three months of last year compared with fourth quarter of 2015.

But the spending wasn't evenly spread, creating clear winners and losers.

Car sales drove holiday spending, as Americans took advantage of big discounts offered by the industry as a strategy to clear inventory. The late-year surge -- driven also by moderate gasoline prices and aging cars on the road that continued to nudge Americans to dealerships -- lifted car sales to another yearly record.

Meanwhile, spending on furniture rose healthily during the holidays, and online stores had a big quarter as Americans continued to turn to websites like Amazon and Wayfair for their shopping.

But that shift continued to wallop brick-and-mortar outlets like Macy's Inc. and Sears Holdings Corp., with department-store sales falling sharply last quarter compared with a year earlier. In all of 2016, spending rose 11% at online retailers and fell almost 6% at department stores, the government's report showed.

Last week, Macy's, Kohl's Corp., J.C. Penney Co. and Sears each reported a drop in holiday sales. Macy's has earmarked 100 stores for closure and will slash more than 10,000 jobs. At Sears, the store closings numbered 150.

In an interview last week, the finance chief of Macy's said the closures would allow the company to focus on its best locations and funnel more money into e-commerce, which performed well during the holiday period.

"The big thing we're focusing on is what should our stores look like going forward?" CFO Karen Hoguet said.

Kohl's Chief Executive Kevin Mansell said sales were volatile during the holidays, with strong sales on Black Friday offset by broad weakness in November and December.

Despite the weak showing from department stores and a handful of other retailers, including L Brands Inc., which owns the Victoria's Secret chain, National Retail Federation CEO Matthew Shay said the overall results pointed to a strengthening economy.

"Retail mirrors the economy," Mr. Shay said. "And while there might have been some bumps in the road for individual companies, the retail industry overall had a solid holiday season."

Meanwhile, a rise in gasoline prices in recent months may be hitting restaurants. Sales at bars and restaurants rose tepidly in the final four months of the year compared with the summer, as spending at gas stations rose briskly.

Write to Josh Mitchell at joshua.mitchell@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

January 13, 2017 12:31 ET (17:31 GMT)

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