Regional Specialists Review September 2012
Recent releases are showing some signs of a pick-up in U.S. growth from the weak summer, except in manufacturing, which is slowing. Europe remains in apparent recession, yet we detect hints that efforts in its periphery nations to reduce costs and increase competitiveness are beginning to bear fruit. Emerging markets remain in an economic downshift.
Meanwhile central bankers are increasing their drum beat, signaling further stimulus. The U.S. Federal Reserve just announced plans to purchase $40 billion of mortgage-backed bonds every month - without a defined deadline - and other measures.
Athough the long-term trajectory for economic growth remains shallower than normal, we feel that central bank actions could have a meaningful analgesic effect on a painful recovery.