Consumer confidence hits four-month high

Still, most anticipate very small wage gains, along with larger price increases driven by higher food prices. 

“Consumers anticipate a rocky economic road ahead," said Richard Curtin, Survey of Consumers chief economist.

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The Michigan survey’s index of current conditions, a reflection on whether consumers think now is a good time to buy more expensive items like cars, dropped to 85.7 from 88.7 in August.

But consumers have better expectations looking down the road six months, usually a better indicator of spending, with the index increasing to 73.5 from 65.1 in August. 

A separate survey from the Conference Board earlier this week showed confidence hitting a seven-month high. 

Consumers are seeing a gradually improving housing market with higher prices along with record-low mortgage rates, making home buying more affordable. 

Still, the unemployment rate remains above 8 percent, and Congress is creating uncertainty for consumers and businesses, which remain reluctant to pick up hiring until lawmakers deal with the looming fiscal cliff. 

A separate report on Friday showed consumers spent more in August but most of that increase was largely due to high gas prices. 

The Commerce Department said Friday that consumer spending rose 0.5 percent in August from July, the largest increase since February. 

Taking out gas purchases, spending rose only 0.1 percent last month.

Consumer spending represents 70 percent of economic activity, and in the past has driven economic recoveries. 

This time around, spending has been slow to bounce back.