With four years of economic recovery now in the books, we are seeing more pockets of improvement, which has led many economists to greatly increase their expectations for growth. We remain more cautious, with real GDP expected to rise just 1.7 percent in 2013 and 2.4 percent in 2014. The modest overall numbers are deceiving because we are starting from such a weak base. Fourth quarter-to-fourth quarter growth, which is the way the Fed issues its forecast, shows real GDP rising 1.9 percent in 2013 and 2.6 percent in 2014. Moreover, we see the sequestration process producing a much larger drag, particularly later this year. Fourth quarter-to-fourth quarter private-sector growth is expected to rise 3.4 percent this year and 3.8 percent in 2014.
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