These are bagworms.

The easiest thing to do is take a grocery bag and a pair of scissors ... and cut the bags off the tree, depositing them in the grocery bag for disposal.

If your tree is large ... or if it is your preference, you might try a insecticide spray early next spring ...

... "You can control bagworms by hand-picking them from infested plants during the winter or before the eggs hatch in the spring," says Dr. Patricia Cobb, an entomologist with the Alabama Cooperative Extension System.

Cobb suggests using chemicals to control bagworms only as a last resort. "Chemicals, such as Orthene Turf, can kill bagworms if applied in May or June while the caterpillars are still small," says Cobb.

SOURCE: DR. PATRICIA P. COBB, Extension entomologist , Alabama Cooperative Extension System

oh gosh, bagworms are the worst. they were routinely going after my leland cypress trees. and i've even seen them on a few of my norwegian spruce trees. almost killed a few of them. i used the sevin insecticide....with the hose attachment. it didn't harm the trees, and killed these pesky buggers.