Optimism fades as risks rise
- Disappointing employment gains signal weaker growth in current quarter
- Increasing cautiousness suggests further slowing in second half of the year
- Concerns about a disorderly outcome in Europe and a slowing in emerging markets are adding downside risk to U.S. economic outlook
- U.S. faces an enormous yearend fiscal cliff, but temporary measures should help avoid a large economic contraction
- However, divided and “broken” government leads to only temporary fiscal measures, failing to provide any policy certainty