Buoyed by substantial policy support and improving financial conditions, the economic recovery is progressing. Monetary policy should remain accommodative to support the economy as fiscal policy tightens, but the ground work for eventual interest rate increases is already being laid, a task that should continue. In the labour market, additional support for job training and enhanced education may be required to reintegrate workers whose skills will become degraded from long periods of unemployment or whose skills will no longer match up with the needs of employers. The reform effort should focus on policies that contributed to the imbalances. In particular, as the housing market recovers and home prices rise, public support to homeownership should be decreased to curb incentives for overinvestment in housing. Implementation of financial reform needs to better address problems of incentives in the banking sector and tackle problems of moral hazard. Higher public and private saving and stronger exports would limit the extent that large current account imbalances reemerge and would support matching efforts that should be taken in surplus countries.