December 2011
Posted December 27, 2011
Read the Full Newsletter
In this Issue:
The U.S. Economy
On those cheery points, let’s try to find some better news. The economic data we observe for the U.S. is suggesting a roughly 2 percent (annualized) growth rate in the 4th quarter, following a 2 percent rate for the 3rd quarter of this year. This is a substantial improvement over the 0.4 percent and 1.3 percent reported by the National Bureau of Economic Research for the first two quarters of 2011. However, it’s also somewhat disappointing given the massive (and expensive) stimulus thrown at the problem.
European Economy
It’s much worse in Europe. Even weaker organic economic growth rates, coupled with the massive cost to bail out the insolvent countries (Greece, and perhaps Italy and Portugal) will place an anchor on European growth rates. Getting the 17 countries that make up the eurozone to agree on fiscal policy and bail out packages has proven an enormous challenge. And yet, they must agree. Failure will result in the fracture of the Union, and the resulting cost will likely be many times the cost of putting a firewall around those who are insolvent to prevent contagion spreading to those who are solvent.
