After two years of disappointing economic surprises, there are signs of a turnaround ahead, closely followed strategist Jim Paulsen said Thursday.
And that's a reason to be bullish on the stock market, the chief investment strategist for Wells Capital Management told CNBC's "Power Lunch."
In fact, he believes stocks are heading for new record highs in the near term, with the possibly reaching 2,200 before the year is over.
"Economic surprise indices have been steadily rising," he said, noting that there have been good reports this week leading up to Friday's highly anticipated jobs report.
"I think that we're going to find out that we've been underestimating economic growth here in the United States."
Paulsen expects the economy to grow about 2.6 to 2.75 percent in the second quarter, and maybe even more in the second half. If that happens, he expects bullish optimism to be reignited, which will then reignite earnings.
While all that is positive for stocks, it also means the Federal Reserve could move to raise interest rates.
Paulsen conceded the next issue may be that the market has been underestimating how quickly and how much the Fed will have to hike. However, some bullishness will be introduced into the cultural mindset before that occurs, he said.
"I think initially as people see the economy doing better than expected, some of the bearishness of global stagnation, of negative yields across the globe, will go away and I think it's going to force people into equities," said Paulsen.
And if those good economic reports continue, he expects the more cyclical, risk-on parts of the market to replace utilities and telecoms as market leaders.
Therefore, he would sell safe-haven assets at these high prices and redeploy the proceeds into financials, industrials, materials and technology.
— CNBC's Brenda Hentschel contributed to this report.