Salient to Investors:
The median economist estimated unemployment in the euro region rose for a fifth month to 11.9 percent, the highest jobless rate since records began in 1995, while German unemployment held steady at 6.9 percent. The median economist expects the euro-area economy to decline 0.4 percent in Q4 2012, annual inflation to remain at 2.2 percent, but confidence to rise to the highest level since June, while US unemployment will remain unchanged in January.
The IMF expects a second year of contraction in the euro region.
Mario Draghi said the jury is still out on whether investor optimism can be reflected in economic momentum.
Marco Valli at UniCredit Global Research said the worst may be over for financial markets, but the Europe is still in recession, and unemployment will remain very poor at least for another year or longer. Valli sees all the preconditions for economic improvement down the road.
Martin Van Vliet at ING said companies are still laying off, especially in southern Europe, so unemployment will trend higher in the next two months. Ing said financial conditions are improving and markets becoming more optimistic, but has yet to feed through to the real economy.
Luc Coene at the ECB said there is only so much a central bank can do, so the next move won’t be from the ECB. Coene expects a shallow recovery starting this year, and said the latest indicators in Germany indicate a stronger underlying base of activity than was assumed.
Kenneth Rogoff at Harvard said France needs an economic overhaul to revive growth and help underpin the political union required to stabilize the euro region. Rogoff said European governments’ responses to the debt crisis aren’t enough, and they need political integration with taxation powers.
Mark Carney at the Bank of Canada said policy in developed countries isn’t maxed out and central bankers can be flexible in meeting inflation goals.
Patrick de Maeseneire at Adecco said the euro-area economy will be tough in half1, especially in France and southern Europe, while Germany is slowing, automotive slowing. de Maeseneire sees a wider recovery in 2014.
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