Consumers may be willing to start spending again soon, but persistently high gasoline prices and a rising unemployment rate threaten consumer confidence, according to James Paulsen, Chief Investment Strategist with Wells Capital Management.

The outlook for consumer spending is much better than it was at year end, Paulsen says.

"The fear nature of this crisis is starting to die down," he explains. This fear has been exacerbated by an unemployment rate sitting at over 9 percent, he says.

"But our real problem is the 91 percent that have had a job throughout," Paulsen argues, "but got so petrified with fear about where we were headed, they quit spending."

Although government stimulus has helped bolster hopes of an economic recovery, the improvement may be overshadowed by rising gasoline prices, which have been steadily climbing for the past 52 days. Gasoline prices have been driven up by higher prices for crude oil, which have surged past $70 a barrel and by lower levels of production from refiners.

• Gasoline At $3 A Gallon Could Kill Consumers

"A mild increase in gas prices is not a death blow," Paulsen says. "If we get to August and we start creating a few jobs, then $2.50 gas might be very handleable."

However, Paulsen warns that gasoline above $3 a gallon may be "a very big bite."  (To hear all of Paulsen's comments, click here to watch the video.)

Gasoline prices remain below the $4 dollars a gallon level of a year ago, but are up from earlier lows, sitting at a national average of about $2.68 a gallon, according to an Associated Press report. Prices are up 37 cents across the country in the past month.

Amid the prospect of increased consumer confidence, Paulsen suggests taking a look at retail stocks, which have remained relatively flat for the last month or two.

"I think that we're going to have another lift in the consumer sector in the last half of this year," he says. "I think to get out ahead of that at a time when people question it, is a great investment opportunity."

More from Consumer Nation:

• Worst May Be Over for Consumers: Retail Exec
• Warnaco CEO: 'Feeling Pretty Good' About Future
• Is The Recession Over? Check Your Undies
• One Couple, Two Views of Retirement

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