Near-Term Recovery in Euro Area Remains Unlikely, though Recent Events Provide Reason for Moderate Optimism
- European Central Bank commitment to purchase sovereign bonds represents possible strong action to preserve the stability of the euro
- Even in northern Europe, where skepticism regarding bailout measures has been vociferous, increased signs of support are showing
- Euro Area Leading Economic Index improved in August; however, it is not yet clear if momentum has shifted
- Core country LEIs are showing some weakness, raising questions about the countries’ ability to avoid a downturn in this environment
- Housing markets in Europe remain weak and represent both a drag on growth and an additional source of financial market tension
- Individual countries’ housing markets have distinct characteristics due to fragmentation of real estate markets and lack of mobility
