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Weekly Economic Commentary


Small Businesses Less Optimistic in March

April 10, 2012

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The Small Business Optimism Index of the National Federation of Independent Business fell in March to 92.5 from 94.3 in the prior month. The March decline is the first after six monthly gains since September 2011.

Chart 1 - 04 10 2012

Although the percentage of respondents indicating that “poor sales” is problematic has held steady for two straight months, it has failed to show an improvement in March. The index tracking plans of firms to increase employment declined to zero from 4.0 in the prior month, the poorest showing since October 2008, which was during the global financial turbulence. It may be premature to attach a great deal of importance to these results because the April survey will be a better indicator of underlying business conditions as survey participants in the first month of the quarter are significantly larger than the latter two months of each quarter.

Chart 2 - 04 10 2012

Safe-Haven Trades Are Dominating the Marketplace Once Again

Concern about the U.S. economy after soft payroll numbers, stress of eurozone debt crisis, and doubts of a Chinese soft-landing are factors haunting markets in recent trading days. The U.S Treasury note yield has dropped below 2.0% and the German bund was trading at 1.64%, a historical low, as of this writing (see Chart 3, data points do not include today’s quotes). As recently as March 19, the U.S. Treasury note yield hit a high of 2.39%. Data to be published between now and Fed’s April 24-25 FOMC meeting are unlikely to alter monetary policy. The Fed is on a watch-and-wait mode.

Chart 3 - 04 10 2012











The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.