What is the outlook for 2013?

ON NORTH AMERICA

Let us start with the reasons to be cheerful about the US economy. The brightest star must be the housing market, where there are clear signs of a recovery.

Housing starts accelerated throughout 2012 culminating in December when they were up 12.1% from the previous month and 36.9% from a year ago. This is encouraging as it shows housing is now a tailwind rather than a drag on US GDP. There is also the related impact of improving both consumption and consumer sentiment. As mortgage lenders continue to repair their balance sheets they may become more inclined to provide mortgages, which would provide some surprise to the upside. Another area of encouragement in the macro situation lies in employment levels. Unemployment peaked in 2009 at 10...