Despite rising fuel costs and grocery prices, American consumers are still optimistic about the economy. A recently released Bloomberg report shows that household confidence improved last week to match the highest level in the past four years, which can only mean good things for retail merchants.

The Bloomberg confidence index was observed at minus 31.4 points during the week ending April 15, a 1.4 point improvement compared to the previous seven days. The 31.4 reading is the highest since March 2008, insinuating that the retail sector is on its way to emerging out of the recession-era doldrums, Retailing Today notes.

However, economists were quick to note that many Americans are still unemployed, which may put a damper on expectations.

"The uneven nature of the recovery will likely continue to restrain the type of improvement in consumer sentiment that one would traditionally observe at this point in the expansionary cycle," said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.

Retailers looking to drive in-store traffic, despite the cost-conscious consumer mindset, may want to consider offering discounts. This will make it easier to justify shopping, despite higher commodity prices.