TOPIC SUMMARIES Economic Insights

SAME OLD, SAME OLD: Economic data this week showed trends similar to the last several months: the U.S. returning to health; a recession starting to fade a bit in Europe; headwinds for emerging markets as China rebalances toward consumer spending as the growth driver.

• THE TAPER CONUNDRUM: The Fed will likely tamp down hard on taper talk at this week’s meeting. While it doesn’t want interest rates to rise, it does want sustainable growth, which is likely coming; yet, faster growth will bring higher interest rates.

• TIMING THE CRISES: Global growth trends are diverging: a U.S. recovery is underway, Europe is still in recession, and emerging markets face headwinds. The timing of crises is the differentiating factor.

• RESTORING THE WEALTH EFFECT: Gains in stock and home prices helped boost household net worth above its pre-recession peak. Improved confi dence from better financial positions is providing a boost to consumer spending, part of the Fed’s strategy for recovery. Some businesses are taking advantage of the ultra-low interest rates and re-leveraging.

Weekly Data…Same Old, Same Old
It was a slower data week for much of the world, but the reports that emerged showed trends similar to the last several months: the U.S. economy is gradually returning to health; better data suggests the recession in Europe may be starting to fade; and, there are headwinds for emerging markets along with what is likely a “new normal” in China.