Real GDP increased 1.9% in 2013 (that is, from the 2012 annual level to the 2013 annual level), compared to an increase of 2.8% in 2012.  We believe that 2014 will be more like 2012 – with no tax hikes and minimal sequestration during an election year – and that the expansion’s duration means that lower levels of unemployment will make Main Street feel better.  Sever weather has dampened economic activity early in 2014, but we think the underlying trends indicate ongoing growth in hiring, investment, and consumption, as reflected in a range of leading indicators (see Weekly Chart).

David Fuller's view

Here is The Weekly View report.

Its forecast of 3% GDP growth in 2014 sounds plausible to me and that should help to cushion downside risk for the relatively expensive US stock market during periodic shakeouts.  Meanwhile, higher corporate profits, on average, would lower valuations in a broadly ranging market.