With the markets' movements in recent weeks driven almost entirely by news coming out of Europe it would seem that the European outlook must be central to the prospects for global economic and profit growth. However, evidence to the contrary was abundant mid-June as the stock, bond, and commodity markets posted a gain despite the ongoing growth and solvency risks among some European nations.

Recent economic and company reports reaffirm strong growth in Asia and solid growth here in the United States. This data helped to ease investor fears that a weak outlook for Europe spells the end of global economic and profit growth. Recent data included:

• the largest rise in China's exports in six years reported for May, bolstering confidence that global demand remains solid, fueling the fastest-growing major economy.
  
• surging retail sales in the United States. While soft in May, sales at retail chain stores have rebounded sharply over the past two weeks, posting the strongest weekly gains of 2010.
  
• the Organization for Economic Cooperation and Development (OECD) raising its forecast for global growth to 4.6% in 2010 and 4.5% in 2011. These forecasts are up from six months ago when it predicted growth of 3.4% this year and 3.7% in 2011. In addition, the OECD reported that unemployment among the 31 member countries may have peaked at around 8.5%, much lower than its previous prediction of almost 10%.
  
• the fastest rate of growth in Japan in three quarters. Japan's Cabinet Office reported that the economy expanded at a strong 5% annualized rate in the first quarter driven by exports to Asia.
  
• solid job growth in South Korea and Australia. South Korea's unemployment rate declined to 3.2% in May, the lowest level since October 2008, down from 3.7% in April and a 10-year high of 4.8% in January. Australia's unemployment rate fell to 5.2% from 5.4% as the strengthening global economy prompted companies to hire.
  
• some economies growing fast enough for policy makers to begin raising borrowing costs. New Zealand's central bank increased the official cash rate to 2.75% from a record low 2.5%, the first boost in three years. New Zealand is joining other nations hiking rates, including Australia and India.
  
• analysts revised earnings for S&P 500 companies slightly higher last week. Upward revisions have continued even as stocks pulled back. Since the stock market peaked this year on April 23, S&P 500 earnings expectations for the next 12 months have risen 3.6% from $85.69 to $88.78. This has compressed the price-to-earnings ratio to just below 12, well below the historical average.
  
• no sign that emerging European banking problems are spreading beyond the Eurozone to the rest of the world. U.S. LIBOR has remained flat for the past two weeks after initially rising along with European LIBOR for much of May.

Europe may be sneezing, but the rest of the world does not appear to be catching the cold. We will continue to watch real-time indicators for the impact that Europe's problems, and the efforts to combat them, are having on economic conditions.