JONESBORO, Ark. - The global economy is seeing a decline in macroeconomic uncertainty as aftereffects of the financial crisis begin to wane, and if the trend continues as expected it will be bullish for the U.S. economy, St. Louis Federal Reserve Bank President James Bullard said Wednesday.
Echoing his recent more optimistic outlook for the U.S. economy, Bullard, who is a voting member of the policy-setting Federal Open Market Committee this year, cited several factors contributing to the declining uncertainty, including the partial resolution of the fiscal cliff and an improved environment in Europe.
After three years of global macroeconomic uncertainty, "By contrast, 2013 has dawned with a reduction in global macroeconomic uncertainty that may persist for some time," Bullard said in a presentation prepared for delivery to an agribusiness conference at Arkansas State University.
"This is a bullish factor for U.S. macroeconomic growth prospects," he said.
He pointed to the "more robust" U.S. housing market, in contrast to the situation a year ago when "Fear of continued decline in home prices remained a source of uncertainty."
In addition, the election is over, the fiscal cliff concerns have been "partially resolved," and the temporary effects of last year's drought and Super Storm Sandy are dissipating, Bullard said.
However, he cautioned that "Other uncertainties concerning the implementation of new health care laws and longer-term fiscal outlook remain," and businesses remain uncertain which can impact investment decisions.
Meanwhile Europe, where the sovereign debt crisis has weighed on growth in the United States and emerging markets, "2013 will likely see either a stabilization or some recovery in Euro-area growth," Bullard said.
The European Central Bank's announcement of the Outright Monetary Transactions program "has so far been more successful than might have been anticipated, he said, even while "The ECB has so far not been required to purchase national sovereign debt under the program."
The resulting decline in uncertainty also is helping emerging markets, like China, which are expected to see a pick up in growth this year.
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