W. Europe
Oil is biggest problem now. Gas at $4 /gallon. Income deflation, strikes, consumer confidence.
Benefits of EMU beginning to appear. European style efficiency gains from mergers, labor reforms.
Growth has returned. Manufacturing now strong.
Inflation still low, disposable income growth supporting consumer demand until now. Exports strong, euro weak.
Interest rates still low, but rising to defend the euro and prevent inflation. ECB Refi rate at 4% by year-end.
Fiscal policy much easier than last few years.