Some air went out of investors’ hopes today as the government reported lower-than-expected growth for the fourth quarter. Economists had projected a 3.0% increase. Still, the 2.8% pace represents the fastest growth for the economy since the second quarter of 2010. The government also said that consumer spending in the US rose 2% in the fourth quarter, improving the 1.7% rate of the third quarter and 0.7% in the second quarter. As the trading session gets started, stocks are mixed. Bonds remain higher.

Equity investors believe that the domestic and global economies are on the mend judging by their behavior so far. Since the end of September the US Total Market Index, S&P 500, and Dow are up 21%, 19.5%, and 18.5%, respectively. Global stocks as measured by the FTSE All-Worldex-US index are up 11.3%. In contrast, investors are shunning the safety of Treasuries as theBarclay’s 7-10 Index is down .25%. But last year the index soared 15% compared to a meager2% for the S&P 500.

If the attack ads between the Republican primary candidates seem negative now, we need only wait until the general election ramps up full court and speed to plunge to new depths of attacks on person and ideas. Our leadership and candidates for replacement seem bent on stressing the negative. Pessimism seems to trump optimism at every turn. Did you ever wonder why negative attacks are so effective, especially when we claim to prefer ideas, values, and optimism to characterize the public debate?

As we begin a new year we naturally hope for a better one than the last. In fact, much of the economic news released this week supports our hopes. Today the government announced that the unemployment rate fell from 8.6% to 8.5% with the addition of 200,000 more jobs. The results were all the stronger given that the labor pool (those seeking work) did not shrink has it has in previous months. There was also strengthening indicated in manufacturing, factory orders, and the construction industry. These are promising trends, but will they endure?