Despite the economic headwinds resulting from the fiscal cliff concerns in December, the U.S. economy has shown surprising resilience. Data on wages and hours worked have both picked up over the past several months, which is supportive of future employment growth. Importantly, it also appears as though wage improvement will offset tax increases in the coming year. At the state and local level, the U.S. is forecasted to enjoy the most significant job growth in over half a decade. Contribution to overall GDP growth from the state and local sector is expected to finally turn positive in 2013 after being negative since 2009.
As the pent-up demand for capital expenditures and hiring from the fourth quarter enters the market, U.S. economic growth is set to continue. All of this news is particularly positive for the stock market, which has already made up losses from the fourth quarter of 2012 and is poised to continue higher.