Since the U.S. election in November, markets have warmed to the story of fiscal stimulus. But since the inauguration of President Trump, stimulative measures like tax reform and infrastructure spending have taken a back seat to what we would describe as less encouraging protectionist steps. The broad market rally has generally seemed impervious to policy uncertainty. But in time, we think markets may take a more sustained pause to reassess the risks.

While we wait to see whether growth-enhancing policy will emerge, we note this month that some weakness has crept back into U.S. consumption data. Also, we explore how a growth-enhancing policy agenda staked on corporate tax reform might impact the economy. Last, we turn to Europe, where we find pockets of strength despite higher political risk.

More from Macro Report

Global growth continues to diverge, but little seems likely to ignite a corporate or consumer spending boom — whether in the United States or Europe.