Bullard noted that business leaders often say they cannot go ahead with large commitments without more confidence in the future macroeconomic landscape. "A more uncertain macroeconomic environment makes it more difficult to make business investment decisions," he explained. In recent months, Bullard said, there has been a welcome reduction in global macroeconomic uncertainty.
"Global macroeconomic uncertainty has been relatively high in the past three years. By contrast, 2013 has dawned with a reduction in global macroeconomic uncertainty that may persist for some time,” he said. “A less uncertain macroeconomic environment, should it continue, is a bullish factor for 2013 U.S. economic growth."
Bullard discussed reduced uncertainty from three main sources: Europe (both the European sovereign-debt crisis and the European recession), emerging market economies and the U.S. Bullard see the ECB's Outright Monetary Transactions” (OMT) program as helping to relieve some of the financial pressure from European debt problems. He noted that expectations are for Europe to improve in 2013. The St. Louis Fed chief sees emerging economies to fare better this year with China's real GDP growth already posting stronger.
For the U.S., Bullard stated that the presidential election cycle is over and portions of the fiscal cliff have been resolved, both reducing uncertainty. Still, he sees businesses are uncertain about implementation of new health care laws and also the longer-term fiscal outlook.