Get ready, America - the economy is about to take off Things can still go wrong, but 2014 should be a year of greater cheer, writs Robin Harding Spring turns to summer in America, and once again, the mown-grass scent of economic optimism is in the air. An 11 per cent annual rise in house prices and a boom in the stock market does that to people. Higher asset prices are not much good by themselves - growth in incomes, jobs and activity is plodding - but markets seem to be sustaining the economy through the worst of tax rises and government spending cuts. Consumer confidence has not been this high for five years. It has become routine, at about this time of year, to predict that the US economy is on the mend - only for that recovery to swiftly rot away. In the second quarter of 2010, the median forecast for US growth in 2011 was 3.1 per cent, and the Fed was gunning for 3.9 per cent. The actual outcome was a depressing 1.8 per cent and the pattern of the next two years was similar. To make the following prediction, therefore, is vainglorious, like a boxer bragging about the fourth round knockout he will inflict on an undefeated foe. I think next year is the year. In 2014, the US economy will grow by more than 3 per cent. Like most economic predictions, this one relies on the entrails of an unfortunate Washington squirrel, plus optimism that nobody will remember it come the end of 2014. But it also has a logical basis beyond a bit of cheerful data. A depressed economy can grow faster than one at full employment - and the US is running out of icebergs to hit. Take fiscal policy, a prime cause of disappointing growth for the past three years. From the argument over whether to raise the federal debt limit, which sucker-punched the economy in the summer of 2011, to this year's $85bn in across-the-board, sequestration cuts to public spending, US politicians have consistently done more harm than forecasters had anticipated. It will be harder for them to mess things up this year. The deficit is now so much lower - forecast at 4 per cent of the economy this year, compared with more than 10 per cent in 2009 - that it may even be eclipsed as the sole issue driving politics. The moment for a deficit cutting "grand bargain" is gone. For the first time since 2009, there is a higher chance that fiscal policy will add to demand in 2014 than subtract from it. There would be a fiscal boost in the quite plausible scenario that Congress feels some pain and cancels the sequestration. The eurozone crisis, which made itself felt during the summers of 2011 and 2012, drags on. Since Mario Draghi's fateful pledge that the European Central Bank, of which he is president, would do "whatever it takes" to preserve the euro, however, markets have calmed down a lot - this year's Cypriot bailout passed with barely a blip on Wall Street. Eurozone policy makers have a talent for disaster that should never be underestimated but they will have to excel themselves to deliver a real blow to the US economy in 2014. Meanwhile, the revival in housing weighs the biggest anchor on the US economy since 2008: the drag on consumption from households stuck with a big mortgage and a cheap house. Figures released by Corelogic this week showed a 24 per cent year-on-year decline in houses stuck in the foreclosure process. In two of the most important and troubled states - California and Arizona - the decline was more than 50 per cent. Recovery in housing has a powerful accelerator effect. Higher house prices mean that more people have enough equity in their home to refinance at a low mortgage rate; do that and they can start spending more. It helps people to move house, creating demand for everything that goes with that - furniture, fittings and floral wallpaper - and it spurs new construction. Another noteworthy event this week came when Moody's upgraded its credit outlook for the entire US banking sector from "negative" to "stable." Now that the banks have enough capital, they are trying to find people to lend to: terms on commercial and industrial loans are loosening steadily. Finally, interest rates are lower than in previous years, adding more support for the economy, and the Federal Reserve itself is less of a risk to growth. Its new policies tie easy money to the state of the economy - low interest rates at least until unemployment falls below 6.5 per cent and more asset purchases until there is a substantial improvement in the labour market outlook. This reduces the chance of a premature tightening. That chance still exists because the central bank is tying itself in knots over communication. Last autumn the Fed tried and failed to agree on a clearer economic condition for ending its $85bn-a-month, third round of quantitative easing, instead of the vague language on the labour market outlook. It is now paying a price for that lack of clarity. Every sign, however, is that the Fed wants to slowly wind down the pace of easing, watching the economy all the while, ready to step back in with more asset purchases if it weakens. Ben Bernanke, the Fed chairman, takes pains to point out that a slower pace of asset purchases is still an easing of monetary policy. Without so many headwinds - the Fed official's metaphor of choice when trying to explain why their forecasts were wrong during the past few years - the economy will be able to show what it can do. There are things that can go wrong. The debt limit must be raised again this autumn but having dodged a confrontation earlier in the year, Republicans will struggle to stonewall it. There could also be a new shock - a slump in China, perhaps, or a sudden market meltdown, or a natural disaster - but that is true in any year. "It is snowing still," said Eeyore the donkey, gloomily, in A.A. Milne's The House at Pooh Corner. And freezing. "However," he said, brightening up a little, "we haven't had an earthquake lately." The past few years have made us all a bit Eeyorish on the economy, but barring that earthquake, 2014 should be a year of greater cheer.