Consumer sentiment cheering up for holidays

Consumer sentiment in December rebounded to its highest level since September.

Maybe it's the holiday tinsel. Or all those sales at the mall. Maybe American consumers have finally begun to believe in the recovery.

For whatever reason, consumer sentiment in December has rebounded to its highest level since September, according to a preliminary report Friday from the Reuters/University of Michigan Surveys of Consumers. December's reading of 73.4 was just a hair below September's 73.5, which was highest level this year. The surveys' measure of current economic conditions rose to 79.1, its best showing since March 2008.

The new readings, coupled with a separate Commerce Department report Friday showing better-than-expected retail sales in November, suggests that consumers are shaking off those recession blues, at least for the moment.

"The 1.3 percent [month-on-month] gain in US retail sales in November gets the all-important holiday shopping season off to a decent start," writes Paul Dales, an economist with Capital Economics, in an analysis. Even though roughly half of that growth was due to volatile sales of gasoline and autos, "it looks as though retail sales values are on course to increase in the fourth quarter as a whole at roughly the same pace as in the third."

That modest retail increase is a step in the right direction after the worst recession in decades.

What worries economists is that such growth will turn out to be a blip as continued high unemployment, tight credit, and paltry pay raises make it difficult for households to continue the shopping spree because they're busy paying down debt.

But that's a gloomy prognosis for next year. For the moment, after a very tough year, consumer deserve a little Christmas cheer.
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