These countries, and Europe generally, still face immense challenges and it is, as usual, important to stress that sentiment remains vulnerable to setbacks. But a truly disastrous outcome was, once again, avoided. Second, the United States has continued its gradual recovery and has avoided the worst of the so-called “fiscal cliff”.
Some of the headwinds for the US economy are subsiding – the housing market seems to have turned, for example. There are still some key decision points in the fiscal area ahead, but if they can be satisfactorily managed, the US has as good a chance of delivering an upside surprise as a downside one over the period ahead.