I’ve spoken with several reporters yesterday and today, all of whom are asking, “What is happening in the stock market?” In some respects, it is a little unreal—not that long ago, a market decline of about 1.25 percent was considered normal volatility. But given how the market has climbed almost continuously for the past several months, a decline like this has people asking questions.

Perhaps they should be. The market pause since the end of last year could be suggesting a couple of things investors ought to be aware of. If you look at performance at the end of 2013, you see a consistent run-up from October to early December, a pause while everyone worried about the Fed and the taper, and then a last burst of energy. Since then, it’s been bouncing around, but with a downward trend, exemplified by yesterday’s performance.

A couple of weeks ago, we had a fairly spirited debate in an Asset Management department meeting over the economic consequences of raising the minimum wage. Just for fun, and because I like to argue, I strongly took the pro side, contending that the positive consequences would outweigh the negative. This is not a particularly common (or popular) stance in the economics and investing community, but it turns out that you can make a good case for it.

Reading through the December meeting minutes of the Federal Open Market Committee (the group that decided to start reducing the Federal Reserve’s monthly purchases of Treasury and mortgage bonds), I was very surprised. Considering the Fed has, historically, gone out of its way to be obscure, the minutes’ clarity was unusual. In the words of former chair Alan Greenspan, “I know you think you understand what you thought I said, but I’m not sure you realize that what you heard is not what I meant.”

The Fed under Chairman Bernanke has made an effort to be more straightforward, but it still tends to focus on “one hand, other hand” discussions. Harry Truman’s search for a one-armed economist goes on.

Every year, I struggle with the notion of preparing an outlook—I won’t use the term forecast—for the following year. Every year, I point out, to no avail, that it would be much better to do a forecast for the previous year: better data, much more context, and certainly greater accuracy. I’ve had no more success this year than usual, so I’m preparing my outlook as you read this.

The reason I call it an outlook, rather than a forecast, is that forecast implies a level of certainty that, even in principle, simply isn’t achievable. I used the simile the other day that the Fed’s job is like trying to repair a Seiko watch based on a Timex manual, using a sledgehammer operated by a robot controlled from the next room, in the dark, and I stand by it.

As the new year begins, there’s definitely a change in the atmosphere. Not the 18 inches of snow that my snowblower very efficiently directed right into my face. Not the arctic air of the past couple of days, or even the 50-degree rainstorm of today. (If you live in New England and want the weather to change, wait 10 minutes.)

The change I’m referring to is a definite aura of hope for the economy. Carmen Reinhart and Ken Rogoff—the economists who wrote This Time Is Different, about how financial crises are never different—have come out with a study that suggests the U.S. economic recovery is actually doing pretty well, compared with the experiences of other countries emerging from similar crises.

Much of the talk recently about economics has focused on how 2014 will be better than 2013. My last post was on exactly that, and I stand by it. When I woke up this morning, however, there were two significant changes that could mitigate some of that positive momentum.

One of the drivers of the current recovery has been the housing market. After prices dropped significantly during the financial crisis, they have since largely recovered (per the chart below). They remain below the previous peaks, but that is not a bad thing.

I was reviewing the posts I made last December, and it occurred to me that many of the problems we were worrying about then have largely been solved, or at least are on their way there. I think we all have short memories and tend to look more at the now than at the recent past, so it’s worth highlighting some of the very real improvements that occurred in 2013.

The biggest relief, of course, was the successful passing of the date for the Mayan apocalypse. No doubt you were all as worried as I was about the impending end of the world, but, ultimately, my decision not to sell everything and head for the hills was vindicated. We are still here.

After writing about how growth could slow going forward, based on my own analysis and supported by several even more pessimistic analysts, notably Jeremy Grantham and Professor Robert Gordon of Northwestern, I have been spending some time thinking about how the argument is wrong.

As I wind down into the Christmas week, I wanted to reflect on some of the things I’m grateful for.

Family Day