- On U.S. economic growth: “Key sectors such as manufacturing, housing, and international trade have strengthened, firms’ investment in equipment and software has rebounded, and conditions in financial and credit markets have improved” but “the economic situation is obviously far from satisfactory and labor force utilization remains at very low levels.”
- On the housing market: "Although the housing sector has shown signs of improvement, housing activity remains at low levels and is contributing much less to the recovery than would normally be expected at this stage of the cycle.
- On challenges facing Federal, state and local governments: “State and local governments still face tight budget situations and continue to cut real spending and employment” and at the Federal level “resolution of the so-called fiscal cliff and the lifting of the debt ceiling, are probably also restraining activity.”
- On Europe: “A major source of financial strains has been uncertainty about developments in Europe. These strains are most problematic for the Europeans, of course, but through global trade and financial linkages, the effects of the European situation on the U.S. economy are significant as well.”
The problems in the U.S., Europe and Asia are well documented, but the road ahead remains unclear. With persistent concerns about global growth, short term areas of focus include U.S. employment trends (August data will be released Friday), and Eurozone dynamics (such as - Will German central bank chief Jens Weidmann resign from his post?). September will likely be a period of heightened market volatility.