The new year has provided cheer for macroeconomic optimists. This column by Olivier Blanchard, one of the world’s leading economists, argues that important progress has been made in putting the crisis behind us, but that recovery continues to be hampered by the need for fiscal consolidation and a weak financial system. 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. ... (full story)