When the U.S. economy drove off a cliff in October 2008, one result was a higher savings rate for consumers. Instead of running up a bigger balance on credit cards, consumers were suddenly socking away cash for a rainy day.

While that's admirable thrift when analyzed on an individual basis, it didn't do much for economic growth, which economists held out as the best hope for pulling us out of the economic quicksand. Now, there are signs consumers are resuming some of their old habits.

The U.S. Commerce Department reports Americans earned more and spent more in December. Personal income was up 0.4 percent for the last month of the year, with real personal consumption spending rising an identical amount.

Year-end spending spree

 "Today's data show consumer spending clearly accelerated at the end of last year," said Acting Deputy Commerce Secretary Rebecca Blank. "Personal income also posted stronger gains in the fourth quarter compared to the third."

As he broke down the data, economist Joel Naroff, of Naroff Economic Advisors, of Holland, Pa., found consumers increased their spending on bigger ticket durable goods. But it wasn't confined to that.

"Critically, purchases of services -- which constitute about seventy percent of spending -- are starting to come back," Naroff said. "People are buying the little things that make them happy and that points to rising confidence a better future spending ahead.

A consumer with the means and confidence to spend bodes well for the future of the economy, Blank says. And more help may be on the way.

"Looking ahead, we expect disposable personal income to get a boost from the Middle Class Tax Relief Act of 2010, which increases the take-home pay of many working families," she said, 

Tax holiday

That measures reduces the payroll tax by two percent for wage-earners. While adding to the short-term budget deficit, the tax holiday will put more money in consumers' pockets -- money economists and administration officials hope consumers will spend.

Naroff notes consumers' income rose more from investments rather than wages. While money is money, he says dividends and interest aren't enough to drive economic growth.

"We really do need greater increases in wages and salaries if consumers will keep going back to the malls and showrooms," he said. 

While the savings rate fell again in December, it's still at five percent. That may be a healthy level, as far as stimulating economic growth is concerned.

"It is likely that the savings rate will fall some more but there is only so much of future consumption growth that can be funded out of savings given the cautious nature of households," Naroff said.

Naroff says it's still all about jobs, since more employees means more income and more spending.