Optimism is in the air, particularly in financial markets. And some cautious optimism may indeed be justified.
Compared to where we were at the same time last year, acute risks have decreased. The US has avoided the fiscal cliff, and the euro explosion in Europe did not occur. And uncertainty is lower.
But we should be under no illusion. There remain considerable challenges ahead. And the recovery continues to be slow, indeed much too slow.
Put poetically: We may have avoided the cliffs. But we still face high mountains.