NEW YORK (MainStreet) — After an eventful first quarter marked by severe weather, and a recent slide in the Nasdaq, the question on everyone's mind is - how is the economy doing?
Well, it depends on who you ask, but the short answer is "better."
While the first four months have had their fair share of obstacles, many experts remain upbeat about the economy's performance over the remainder of the year.
A recent poll conducted by the National Association for Business Economics revealed that despite its weather-induced rocky start, the economy is expected to grow by as much as 3% by year end.
This optimism is shared by employers. According to a PNC Bank study, 55% of small business owners anticipate an increase in sales and 41% expect to see higher profits in the near future. Over three-quarters of those interviewed reported feeling either moderately or greatly optimistic about the economy - the most since 2007.
What is most intriguing about this boost in confidence is its potential to translate directly into job creation and increased salaries. The same survey found that one in five of the owners surveyed plan to add employees and 30% plan on raising worker pay over the next six months.
Stu Hoffman, PNC Financial Services Group chief economist believes the study's results exhibit signs of an economy that is poised for a strong comeback this season.
"These findings support our baseline forecast that the U.S. economic and jobs expansion should quickly bounce back this spring and begin what may be the best year we've seen since before the Great Recession." Hoffman said.
While confidence in the private sector is encouraging, it is merely one of many factors that need improvement. Several experts believe that the economy's success will come down to its performance in job creation and housing.
The labor market has recently shown signs of promise. As of March, the economy has regained all of the jobs that were lost during the Great Recession. While the unemployment rate continues to descend, concerns about wage growth and the quality of jobs added persist.
Ultimately, consumer confidence grows when people have more disposable income. Christopher Vecchio, currency analyst for DailyFX, believes that the growth of salaries is one of the main indicators that the economy is truly progressing.
"Wage growth and capex spending will be the two of the most important figures to watch in 2014," he said. "If those start increasing, that's when you know the growth cycle is really accelerating."
The housing market so far has produced mixed results. While home values have slowly risen from 2008 levels, sales activity has underperformed.
According to the National Association of Realtors, pending home sales have fallen for the past eight months. Much of this can be attributed to harsh weather and a reluctance on the part of buyers because of higher prices and mortgage rates.
However, housing starts have increased as the weather has improved. According to the Federal Reserve's Beige Report, housing activity increased 2.8% from February to March.
"Building permits, a leading indicator of housing market activity, had its second-best survey in February since the depths of the 2008 financial crisis," Vecchio said.
Despite a rocky start, the economy is slowly, but surely showing glimpses of its potential. While expectations have been tempered, there is good reason to believe that the rest 2014 will be one of the stronger economic years that we have seen in some time.
--Written by John Okoye for MainStreet