Consumer confidence hits highest level in six months

While a strong signal of a recovering economy, household wealth is still below its peak of $66 trillion, and greater strides will be needed to regain all or a portion of the wealth lost during the past three years. 

Still, consumers tend to spend according to how wealthy they feel. In the third quarter, consumers spent at the fastest pace in nearly four years, sparking an increase in economic growth from 2 percent to 2.5 percent. 

Consumer expectations for six months from now, which more closely projects the direction of consumer spending, increased to a six-month high of 66.8 from 64.8.

Meanwhile, President Obama and White House officials are trying to do some confidence boosting of their own by trying to convince skeptical Democratic lawmakers to support a tax plan they argue will provide the economy with a much-needed jolt heading into 2011. 

The Senate will vote at 3 p.m. Monday to begin debate on a bill that extends the Bush-era tax cuts for two years, provides a payroll tax holiday for one year and includes 13 months of federal unemployment benefits. 

House Democrats balked at the deal Thursday, arguing for several changes before they’ll consider any tax package. 

With the Capitol Hill debate ongoing, consumers’ perception of their current financial situation, whether it’s a good time to buy big-ticket items, also improved to 85.7 from 82.1 in November, the best showing since January 2008. 

Holiday sales are expected to increase between 2 percent and 4 percent this season from dismal performances the last two years. 

More shoppers hit the stores and spent more during the extended Black Friday weekend, the National Association of Retailers reported. 

Large retailers such as Neiman Marcus are seeing higher traffic but don’t have any expectations that consumers will push up sales to levels before the recession. 

Some analysts have said consumer spending, especially around the holidays, could take several years to extend to a broader range of earners, instead of merely the top 30 percent. Consumer spending accounts for 70 percent of the economy and has been slow to recover as people save extra cash and pay off their credit card debt.