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Global economic growth slowed the second half of 2012 despite the best efforts of Central Banks to prop up the economy. Quantitative easing programs in both the U.S. and Europe have done little to mitigate the economic damage, and GDP numbers across Europe remain in recession territory while economic growth in the U.S. has dipped under 2%.

Businesses across the U.S. are waiting on the U.S. government to resolve the two fiscal cliffs -- the budget deficit and debt ceiling -- so that they can plan for 2013. Failure to do so will significantly dampen growth prospects in 2013.

But there is some daylight on the horizon. First, reconstruction efforts from Sandy will give a boost to growth in the first and second quarters of 2013 as efforts to rebuild the damaged boardwalks and houses ahead of the summer vacation season kick into effect.

Some areas will take longer to rebuild than others, but given the economic impact the summer season has on New Jersey's fortunes, it is imperative that construction be completed as soon as possible.

The biggest worry is that in December, the U.S. government will not come to an agreement regarding the fiscal cliff -- a chance not being discounted enough by the markets.

Even if a compromise is found, the solution will be a band-aid on a larger problem of trillion dollar deficits and a rising debt load.

The rebound during the first half of next year should give way to continued malaise over the second half as reality takes over in the form of continued slow economic growth.

Housing will begin to bounce back, albeit off depressed levels, but expectations of a strong recovery should be tempered against the reality that the last housing boom was built on an unstable foundation of cheap and easy credit available to anyone who could breathe. The new housing recovery will be built upon a more stable foundation of traditional 30-year loans and lower income levels. This will contribute to a more stable growth in the housing market for certain areas of the country.

This recovery will remain uneven as certain parts of the country show more stability than others. There are areas that remain at depressed levels while they grapple with the costs from pensions and spending levels that were out of control.

The Federal Reserve recently cut its growth estimates for 2013, and the 6.25% unemployment rate remains a fungible, not hard target, meaning that anyone looking for a rise in interest rates could be waiting awhile, even past the initial target of late 2014.

Expectations may be the only tool left for the Federal Reserve, as rates have been at zero now for four years, and job and economic growth remain tepid at best.

Across the country, hope is emerging from the Port of Long Beach, one of the nation's largest ports. Imported containers jumped by 15% from a year ago as retailers stocked up late for the holiday season. Exports jumped as well, along with empty containers leaving the U.S. to be refilled overseas.

As inventories are rebuilt, growth will pop during the first half and we are likely to see a rally, but that will fade as the slow growth reality takes over.

For the stock market, the current malaise will turn to a bullish slant for the first half of 2013, but we are likely to see a repeat of the past two years as the markets started the year strong, only to see a pullback in the spring and summer months.

Given the weakness, it is hard to forecast the market moving much higher, as the PE on the S&P 500 (NYSEARCA:SPY) stands at a level higher than 16 times trailing 12 month earnings. Earnings forecasts for 2013 may show double digit growth, but the past two quarters have shown weak growth at best, meaning estimates may need an eraser once again as the year comes to a close.

Managements will likely push for restructuring charges and set the bar low for 2013 as a recession in Europe and tepid growth in the U.S. causes expectations to be ratcheted downwards.

Further multiple expansions in the S&P 500 and Dow Jones Industrial Average (NYSEARCA:DIA) will be dependent upon Europe's ability to pull itself out of a recession and stronger economic growth from the U.S.

Investors looking for value in this market would be better served to focus upon quality names growing at respectable rates and selling for attractive valuations. In the tech sector, Apple (NASDAQ:AAPL) is reasonably valued at less than 12 times earnings, along with Microsoft (NASDAQ:MSFT), which has tremendous upside if it executes with the Surface and Nokia (NYSE:NOK) phones. Qualcomm (NASDAQ:QCOM) also remains a solid play on the continued expansion of tablets and smartphones with its Snapdragon processor line.

In terms of the broader market, it is a tough call, as global economic growth remains weak. This remains a stock picker's market, and investors should treat it as such.

Source: U.S. Equity Markets 2013 - Signs Of A Turnaround?