It's tough to get a read on the consumer right now.

On one hand, an acceleration of consumer spending at the end of the year pushed holiday sales above even the rosiest of forecasts, suggesting that shoppers may return to more normal spending levels.  But on the other hand, consumer sentiment has soured, as consumers fret over rising costs for gasoline and other goods.

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There are many who expect that consumers are about to curb their spending. Among them Paul Dales of Capital Economics.

Dales said he expects it will be difficult to sustain this level of consumer spending beyond the first quarter of this year.

"The first signs of a slowdown are already beginning to emerge," Dales said.

Retail sales rose 0.6 percent in December from November, that's the smallest monthly gain since July. And core sales eked out only a 0.4 percent gain, which was a five-month low.

The problem is the lack of income growth, Dales said.

"Wealth has not increased," he said "People have dipped into their savings to support their spending and while that is okay in the short term, it is not a sustainable way to spend."

While the payroll tax holiday, which should add about 2 percent extra to the take-home pay of most workers, will likely prop up spending in the short term, rising energy prices may eat up this gain.

Already, gasoline prices have climbed above $3.00 a gallon. That increase, combined with a drop in the average real weekly earnings last month could crimp spending levels.

Craig Johnson, president of research firm Customer Growth Partners, agrees gasoline prices are worth watching.

If gasoline prices rise to a point where they average between $3.50 and $4.00 a gallon for a sustained period of time, the prices will "take the wind out" of consumer spending levels, Johnson said. He estimates that $1.5 billion comes out of retail sales for every additional dime consumers have to pay at the pump.

That said, Johnson is more optimistic about consumer spending this year.

"Despite stubborn near 10 percent unemployment our researchers have found that 90 percent of people with jobs, who account for over 96 percent of retail sales, are clearly spending again—though smartly and strategically—across virtually all categories," Johnson said.

The growth Johnson's talking about is not record growth, but growth that is closer to retail industry's historic annual average, which is somewhere between 4.5 percent and 5 percent.

Johnson, who has yet to issue his formal retail sales forecast for 2011, said that the latest holiday season was very typical of a rebound year coming out of a recession.

"With three years of pent-up demand, a savings rate starting to normalize, and a turn in the job market, followed by an initial turnaround in the economy, it's little wonder that we're seeing some strong growth—despite the unemployment rate," he said.

That showed itself in the final numbers for the holiday season.

The retail industry's trade group, the National Retail Federation, said retail industry sales for the holiday period rose 5.7 percent from 2009, far above even their increased holiday sales forecast of 3.3 percent, which was issued in December.

The NRF forecast excludes automobile, gasoline and restaurant sales as well as online sales.

With online sales added into the mix, holiday sales jumped 7.1 percent year-over-year, according to Johnson. That exceeded his forecast, on the same basis, of 5 percent.

Johnson's forecast was above twice the consensus view of about 2.3 percent growth for the holiday season. Johnson expects families will shop again, while continuing to focus on value and avoiding shopping on credit.

But Dales remains concerned that consumer balance sheets will restrain spending in the months ahead.

"Consumers really want to pay down their existing debt and put their balance sheets in order," he said.

Dales expects there that we will occasionally see bursts in consumer spending as we did during the holiday season, but then spending will "sort of fizzle out."

"This is exactly what happened in Japan," he said. "...There are long-term issues that will be around for some time."

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