Gross Domestic Product- Q4 2013, 1st Estimate

Moody’s economy.com reported as follows: “Despite the reported modest slowing in economic growth in the fourth quarter, the economy actually ended 2013 on a positive note. More of the growth in the fourth quarter came from final sales and less came from inventory accumulation. Growth in real final sales of domestic product—GDP minus inventory accumulation—accelerated from 2.5% in the third quarter to 2.8% in the fourth, the fastest since the first quarter of 2012. The acceleration came despite the negative effects of the government shutdown and the reduction in food-stamp benefits late in the quarter. Fiscal headwinds will shrink during 2014, supporting growth. Preconditions are in place for stronger economic growth in 2014. The problems and imbalances that developed during the housing bubble nearly a decade ago have largely been corrected. Households have significantly reduced their debt burdens. The banking system is well-capitalized and highly liquid. Businesses are highly profitable and competitive.

The main missing ingredient for stronger growth has been confidence. The nightmare of the Great Recession weighs heavily on the collective psyche, and political brinkmanship and policy uncertainty have been hard to bear. But sentiment improved with the budget deal and apparent reduction in brinkmanship in Washington. Investors are especially upbeat, as stock prices continue to hit record highs. With the reduction in fiscal drag and release of pent-up demand, 2014 could be a breakout year for the economy.

Risks to this optimism have been highlighted of late, however. The combination of bad weather, the selloff in the stock market, and turmoil in emerging markets has undermined sentiment. This is expected to be a temporary phenomenon, but should it persist, the outlook will be threatened.”