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

“This is the way the world ends

Not with a bang but a whimper.”

Accounting is commonly perceived as cut and dried. I once had dinner with an interior decorator, who, upon discovering I was in finance, said with some pity, “Well, you can still be creative, right?” My answer, of course, was that if we’re too creative, we go to jail. That pretty much ended the discussion (and got me in trouble on the way home).

My quip aside, accounting involves significant questions of judgment and adjustment. Take Enron, for example. The case was largely a matter of how the accountants reflected the business reality through the legal structure and financial statements. Although it was ultimately concluded that the statements didn’t reflect reality, both the internal financial managers and auditors agreed, at least initially, that the methods used were acceptable.

One of the things I do every day is look back at the previous day and think about what I could have done better. Not so much how I failed (although that occasionally comes up) but whether I did the best I could, and what I could do better.

I’ve been saying for some time that wage growth will be faster next year than this year, and, per the chart below, we can see that it is, in fact, accelerating. It certainly isn’t where we would like it to be, but the trend is in the right direction. Note also that this is in real dollars, reflecting actual gains in purchasing power and not inflation.

I want to be excited about the new federal budget deal, I really do. I get it: it’s big news that we actually have an agreement—for two years even! We can look forward to an absence of catfights, reduced uncertainty, and less of all the good things that go with minimally responsible government.

And yet, I can’t help but feel depressed that such a minimal agreement warrants front-page news in both major national papers. What does this say about our governance? The other thing that worries me is the extensive caveats in those stories—how the deal may well not pass since the conservative Republican elements in the House are dead set against lifting the sequester spending cuts, while many of the more left-leaning Democrats are dead set against the spending limitations and letting extended unemployment benefits expire.