News Analysis: U.S. economy looking up despite Washington drama (2)

HEALTHIER, BUT NOT OUT OF THE WOODS YET

"I don't think we're out of the woods yet," said Scott Nystrom, associate economist at Regional Economic Models Inc., referring to the country's flimsy jobs growth over the last few months.

Moreover, the fiscal cliff deal saw a payroll tax hike that economists said could eat away at disposable income and cut into consumer expenditures from dining out to trips to the movies, economists said.

And there remains uncertainty over President Barack Obama's health care overhaul and the financial reforms passed in his first term, with corporations piling cash and hesitant to deploy those funds, economists said.

Critics blast both bills for lack of clarity on how they will be implemented and what taxes businesses will have to pay, making it difficult for businesses to move forward.