- "After three consecutive quarters of growth, and two in the UK due to the VAT hike, the revival of G7 economies is now confirmed. With varying degrees of recovery from one country to another, the upturn in demand is much stronger in the United States than Europe, and even more so in Japan. While there are marked discrepancies in household consumption and productive investment, the revival in foreign trade and stock replenishment is seen virtually across the board."
- "Yet this recovery remains fragile and somewhat unorthodox:
• It is fragile because there is continued fiscal stimulus to sustain household consumption in the United States (personal tax) and Japan (net transfers), while in most of Europe this stimulus (scrapping premiums) has now been exhausted.
• It is somewhat unorthodox in that the widespread revival in foreign trade is resisting the movements in real exchange rates and stocks are being replaced when anticipated demand remains frail. These paradoxes suggest that the recovery owes a lot to the financial conditions, following the example of the 2008 world recession."
- "Monetary stimulus is also proving effective. Beyond a few mildly encouraging signs in private investment, the fall in real rates has helped reduce US and Japanese household saving rates substantially due to wealth and substitution effects."
- "Lastly, while growth can no longer be sustained over the next few quarters due to the depleted fiscal stimulus, the ongoing monetary stimulus is helping to narrow the risk of a relapse in the G7, unless of course the situation is aggravated by contagious effects from the sovereign debt crisis."
Natixis Flash Economics 339 20100701
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