Payroll Tax Cut Agreement: Economic Boost?

Congress will extend tax break for Americans; economy still recovering.
3:49 | 12/22/11

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Transcript for Payroll Tax Cut Agreement: Economic Boost?
Breaking news that means more money for nearly every American family. Late today congress reach an agreement on taxes. After weeks of brinksmanship threatened a 160. Million Americans with a tax hike averaging a thousand dollars a year. That -- say major cloud over the economy on a day that was full of all kinds of encouraging signs that this recovery is sticking. ABC's Jim apple starts us off and -- the big question now will this reassurance from Washington actually give a boost to the recovery. -- -- it does mean more money in America's pocket and it should help things along in fact economists say if they hadn't done as Washington. Could've put the brakes on the rush of momentum the country is finally feeling. It's the busiest shipping day of the year it. Sixty million working Americans died January 1. We'll have 3500. Dollars more a week to pay for all those gifts. This had a wonderfully. Giving the American economy a jump start to a tooth. Around -- erotic UPS driver for 25 years is crisscrossing northern New Jersey -- this company delivers. 300 package every second. My 35 to 40% more volume stops and some of the residential areas a positive sign that holiday businesses better than. -- -- out people seem to be him buying -- the busy shopping season breaking a three year trend that helped sink the American economy. Consumers I think have shown a lot of fit T going to comes to being so frugal they have cut back on spending. Over the last three years and that's really created this enormous pent up demand for cars. Home appliances. And home electronics. Quality consumer spending is expected to be up nearly 4%. Consumer confidence rose nearly 6% today. Boxing was because Americans are feeling better about their jobs and their homes today the number of people filing. Lowest rates in spring of 2008. Economists now expect December to -- the sixth straight month America will add at least 100000 new jobs plus houses are holding their value better and builders are back at work and courage by. Record low interest rate. -- that is beginning to take some people who have been sitting on the fence. To start seriously moving ahead in buying homes. But -- of all that -- optimism economists worry that hard times are not over. One of the biggest threats Washington brinksmanship as we saw today that shakes consumer confidence and causes the uncertainty that make small businesses -- -- Jim thanks is go to Washington and check in -- of ABC's John call for more on how this deal got done. And John the house Republicans are real holdouts here but with Christmas coming up pressure got so intense. Oh it sure did you know house Republicans took a firm position they said no way. Would they accept a temporary extension of that payroll tax cut but they were -- early alone on this. Speaker Boehner and his and his Republicans said that they would hold this position but they had support of nobody in the senate -- senate Republicans overwhelmingly supported. The temporary extension. And ultimately they came out today and had to give in entirely George this is a significant moment. In the history of this Tea Party congress this is the first time that they have dug in on a major issue with the president. And given in virtually completely to the president's visit -- -- -- completely back up what this means -- just underscored. Two months extension of the tax cut they'll go back and negotiate the full year extension. That's right there will be negotiations will happen in January and February and everybody is now predicting. -- -- -- those negotiations will go find they will get a yearlong extension but it's not going to be an easy negotiation never is okay Jon Karl thanks very much.

This transcript has been automatically generated and may not be 100% accurate.

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