The U.S. recovery appears to be somewhat ahead of those of most other advanced industrial economies; for example, real GDP is still slightly below its pre-recession peak in Japan and remains 2 percent and 3 percent below pre-recession peaks in the United Kingdom and the euro area, respectively. Nevertheless, I see some grounds for cautious optimism abroad as well.
As in the United States, central banks in other advanced economies have taken significant steps to strengthen financial systems and to provide policy accommodation. Financial-sector reform is proceeding, and the contractionary effects of tight fiscal policies are waning.