The economic indicators, including The Conference Board’s Leading Economic Index®, Consumer Confidence Index®, Employment Trend Index™, the Help-Wanted-Online Data Series®  all signal the U.S. economy is getting fundamentally stronger. Consequently, the Board has revised up its second half of the year growth expectations, though growth should remain moderate by historic standards at less than 3%.

Improvement in employment gains are key since they buoy stronger wage and salary increases, which in turn powers consumer spending. The pick-up in hiring by corporations also suggests that corporations might soon loosen up a bit on their tight reins on capital expenditure spending and deploy some of the large cash reserves they have built up over the years. The drag from the state and local government sectors is easing up as the most intense austerity measures look to be behind us.

However, the U.S. economy still faces headwinds from higher gasoline and oil prices, ongoing consumer caution, the winding down of U.S. fiscal stimulus, slower emerging market growth, and still risk from Europe, albeit somewhat diminished.