The U.S. economy appears to be gaining momentum and could be poised for expansion this year as experts predict strong growth amid an improving job market.
"We seem to be on track now," said Christine Armstrong, senior vice president at Morgan Stanley. "We're where we should be right now."
The Commerce Department yesterday estimated the economy grew at 2.6 percent from October to December, up from its previous estimate of 2.4 percent. Fueling the gain was the fastest consumer spending, which accounts for 70 percent of the nation's economy, for any quarter in the past three years.
"Going forward, in order for consumers to maintain a hardy spending level, there will need to be organic support from job and income growth, the catalyst to which is business investment," said Lindsey Piegza, chief economist for Sterne Agee.
Experts are optimistic about growth this year. The National Association for Business Economics predicts the economy will grow 3.1 percent this year, far higher than the lackluster 1.9 percent gain in 2013, which would be the highest rate since 2005.
"We are looking for progressively faster growth as the year goes on," said Doug Handler, chief U.S. economist at IHS Global Insight.
Cold weather has hampered growth and spending in recent months, with everyone from UPS to Macy's blaming poor weather for disappointing financial results. Still, Armstrong said the markets have handled various bumps in the road well.
"We're up or down a few hundred points and then keep on chugging," she said.
Initial unemployment claims, a sign of firings and layoffs, dropped by 10,000 to 311,000, the fewest since November, the Labor Department said yesterday.
In February, employers added 175,000 workers, more than expected, and a Bloomberg survey estimates 190,000 jobs added in March. The official Labor Department report will be released on April 4.
"Activity in the second quarter is going to represent something of a rebound from the first quarter," said Tom Simons, an economist at Jefferies. "We've seen enough good numbers recently to say that it is a sign of fundamental improvement."
Herald wire services contributed to this report.
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