As the employment picture stabilizes and the stock market posts moderate gains, consumers that have denied themselves all indulgences for the past two years are starting to come back into stores, new data suggests.

When the ICSC published its February same-store sales figures earlier this month, the 3.7 percent gain marked the third month in a row that sales were up from last year’s levels. No doubt the improving statistics are partly due to the fact that the comparisons are to one of the worst sales years on record. In addition, there is an inherent “survivor bias” in the numbers. Many retailers posting big drops last year have closed stores or are now out of business. The stronger field of retailers in the same-store sales pool are bound to report better numbers because of that.

Yet for the first time in a long time, people also feel more certain of their future, industry sources say. Whether they will continue to spend with enthusiasm in the coming months will depend in large part on the jobs situation and the housing market.

“If jobs are viewed as being more plentiful, even people who have jobs will probably be able to exhale and feel less insecure and go out and spend,” says Bob Bach, chief economist with real estate services firm Grubb & Ellis. “And it’s possible that we have already seen unemployment peak, at 10.1 percent [in October 2009]. The labor market is headed in the right direction, stock prices just went up dramatically last year, so people have gone from being shell-shocked to feeling considerably better.”

Prior to the 3.7 percent gain last month, the U.S. retail chain store sales index showed gains of 3.6 percent in December and 3.0 percent in January, according to the ICSC. Sales at individual retailers, such as Target and Best Buy might have been positively affected by a smaller field of competitors after a number of big-box chains went out of business last year, according to Bach. But the overall results were likely an accurate reflection of greater demand for consumer goods, he says. People have been postponing new purchases for close to two years and really want to shop.

Most retail sectors benefited from positive sales growth in January and February, according to the MasterCard Advisors’ SpendingPulse report, which tracks aggregate sales activity in the MasterCard payments network, together with survey estimates for sales paid for in cash and checks. Sales for consumer electronics were particularly strong, posting a year-over-year increase of 5.8 percent in February. Luxury ex-jewelry sales were up 15.2 percent, while sales of men’s apparel went up 5.7 percent.

Another encouraging sign is that retailers across virtually all sectors, including warehouse stores, mass stores and department stores, are reporting an increase in shopper traffic, says Mary Delk, director with Deloitte Consulting LLP, a global consulting firm. The increase in traffic at department stores is particularly important because that’s a sector that’s associated primarily with discretionary spending, she adds.

All these small gains notwithstanding, it will be a long time before U.S. consumers will be shopping at the same level as they did before the recession, the experts say. There is still uncertainty over whether the housing market has bottomed out. In February, the Deloitte Consumer Spending Index, which tracks consumer cash flow as an indicator of future spending, fell 33 basis points to 4.31 percent from a gain of 4.64 percent in January because of a lack of real wage growth.

The Conference Board’s Consumer Confidence Index also fell sharply in February, partly due to concerns over the labor markets. The Index, which uses 1985 as the measure for 100, fell 10.5 points to 46.0 last month, from 56.5 in January. The Index is based on surveys of 5,000 U.S. households.

The employment situation also remains harsh. While job losses have stemmed and the official unemployment figure has fallen in recent months, the employment market remains troubled. Overall, the official unemployment figure sits at 9.7 percent. A broader measure that includes discouraged and underemployed workers is higher—a seasonally adjusted 16.8 percent in February. In addition, the percentage of workers unemployed for 26 weeks or longer remains near an all-time high at 40.9 percent. Lastly, it is estimated that the U.S. economy has shed more than 8 million jobs since 2007.

Plus, many people have turned their attention from their personal financial troubles to the country as a whole and cite the U.S. budget deficit as one of the factors affecting their purchasing decisions, says C. Britt Beemer, founder of America’s Research Group, Charleston, S.C.-based consumer behavior research firm. “For the first time in 30 years I am getting political answers to personal questions,” Beemer notes.

As a result, most industry experts forecast a likely stabilization in retail sales levels this year, barring negative news from the Labor Department, but nothing on the scale that retailers saw in 2005 and 2006. In 2006, the ICSC recorded a 4.8 percent annual increase in same-store sales, excluding Wal-Mart, the highest level in six years. (Same-store sales in 2009 were down 1.9 percent).

“Those days are over,” says Bach. “Consumers still have a lot of debt on their books that they need to pay down, they need to save more; the last year and a half has really been a wake-up call. I don’t look for consumers to really take a leading role in the recovery this year and I don’t look for exuberant levels of spending for a long time.”

One quirky look at current levels of consumer confidence can be glimpsed from a survey recently commissioned by Taubman Centers Inc., a Bloomfield Hills, Mich.-based mall REIT.

From Jan. 21 through Feb. 12, Market Strategies International, a global research firm, used the Internet to ask 1,038 of Taubman’s regular customers what they expected to see in skirt fashions in the spring of 2010. According to a quirky old formula, shorter skirts correspond with better economic times, while recessions and depressions cause hemlines to fall below the knee.

Approximately 82 percent of survey participants said they expected skirts to be either just above or just below the knee. According to Taubman’s interpretation, that translates into “cautious optimism.”

—Elaine Misonzhnik