Fed responding to improving economic outlook

It now appears that GDP growth will slow to around 1.8% in the second quarter, but we should see a pick-up in the second half of this year. The slowdown is probably a delayed reaction to the tax hikes at the start of the year and more recently the sequestration cuts to Federal spending. But this fiscal contraction should begin to ease in the second half of this year, leading to a pick-up in growth.

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