What's Missing from the QE2 Debate (Economic Outlook) (Quantitative Easing) (Report‪)‬

During 2010, the major issues facing the global economy have been and continue to be (1) the strength and sustainability of the U.S. economic recovery and, in particular, the ability of U.S. consumers to sustain consumption growth; (2) the ability of Europe to navigate its sovereign-debt problems; and (3) the ability of China to maintain growth while avoiding inflation. In September and October, these concerns, each of which had intensified at various times during the first eight months of 2010, lessened to varying degrees. That said, problems remain in all three areas, with the largest uncertainties tied to the success or failure of QE2, the Federal Reserve's most recent round of quantitative easing, and--perhaps more important--to the outlook for U.S. fiscal policy under a new Congress with a Republican-controlled lower house pressing for smaller government and fiscal contraction.