Tag Archives: small business

NFIB Small Business Optimism – July 2015

The May NFIB Small Business Optimism report was released yesterday, August 11, 2015. The headline of the Small Business Economic Trends report is “After Two Steps Backwards In June, Small Business Optimism Takes One Step Forward In July.”

The Index of Small Business Optimism increased 1.3 points in July to 95.4.

Here are some excerpts from that I find particularly notable (but don’t necessarily agree with):

“July has produced the most grudging of gains in the Index’s history and is still not above the 42 year average of 98.0, 99.5 through 2007. This leaves current readings just over two points below the average and five points below the December 2014 reading.”- Bill Dunkelberg, NFIB Chief Economist

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LABOR MARKETS

Job creation was flat in July. On balance, owners added a net 0.05 workers per firm in recent months, better than June’s -0.01 reading, but still close to the zero line. Fifty-seven percent reported hiring or trying to hire (up 5 points), but 48 percent reported few or no qualified applicants for the positions they were trying to fill. Sixteen percent reported using temporary workers, down 2 points. Twenty-five percent of all owners reported job openings they could not fill in the current period, up 1 point, but 4 points below the highest reading for this year. A net 12 percent plan to create new jobs, up 3 points reversing last month’s loss.

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CREDIT MARKETS

Four percent of owners reported that all their borrowing needs were not satisfied, historically low. Thirty-two percent reported all credit needs met, and 51 percent explicitly said they did not want a loan. For most of the recession, record numbers of firms have been on the “credit sidelines”, seeing no good reason to borrow. Only 2 percent reported that financing was their top business problem compared to 22 percent citing taxes, 21 percent citing regulations and red tape and 10 percent citing weak sales.

The availability of qualified labor has replaced weak sales in third position, cited by 13 percent as the number one problem. In the Great Recession, no more than 5 percent cited credit availability and interest rates as their top problem compared to as high as 37 percent in the Volcker era. Thirty percent of all owners reported borrowing on a regular basis, down 1 point. The average rate paid on short maturity loans rose 20 basis points to 5.2 percent. Loan demand remains historically, owners can’t find many good reasons to borrow to invest when expectations for growth are not very positive.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the August 11 Doug Short post titled “NFIB:  Small Business Optimism Up 1.3 In July“:

NFIB Small Business Optimism

Further details regarding small business conditions can be seen in the full July 2015 NFIB Small Business Economic Trends (pdf) report.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2056.03 as this post is written

NFIB Small Business Optimism – May 2015

The May NFIB Small Business Optimism report was released today, June 9, 2015. The headline of the Small Business Economic Trends report is “Small Business Optimism Rises In May, Yet Nothing To Write Home About.”

The Index of Small Business Optimism increased 1.4 points in May to 98.3.

Here are some excerpts from that I find particularly notable (but don’t necessarily agree with):

The Index of Small Business Optimism increased 1.4 points to 98.3 in spite of 5 months of lousy growth. May is the best reading since the 100.4 December reading but nothing to write home about. The 42 year average is 98.0, a bit lower than the 99.5 average through 2007. Eight of the 10 Index components posted improvements. Overall, the Index remained in a holding pattern, a few points below the pre-recession average, although at the 42 year average, and showing no tendency to “break out” into a stronger pattern of economic growth.

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LABOR MARKETS

Small businesses posted another decent month of job creation in May, a string of 5 solid months of job creation. On balance, owners added a net 0.13 workers per firm over the past few months. Fourteen percent reported raising employment an average of 2.7 workers per firm while 12 percent reported reducing employment an average of 3 workers per firm. Fifty-five percent reported hiring or trying to hire (up 2 points), but 47 percent, reported few or no qualified applicants for the positions they were trying to fill. Thirteen percent reported using temporary workers. Twenty-nine percent of all owners reported job openings they could not fill in the current period, up 2 points, revisiting the February reading, and the highest reading since April 2006.

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INVENTORIES AND SALES

The seasonally adjusted net percent of all owners reporting higher nominal sales in the past 3 months compared to the prior 3 months rose a stunning 11 points to a net 7 percent. Eleven percent cited weak sales as their top business problem (unchanged). Expected real sales volumes posted a 3 point decline, falling to a net 7 percent of owners expecting gains, after a 5 point decline in January and February, a 2 point decline in March and a 3 point decline in April. Overall, expectations are not showing a lot of strength.

The net percent of owners reporting inventory increases fell 4 points to a net negative 5 percent (seasonally adjusted). The net percent of owners viewing current inventory stocks as “too low” improved 1 point to a net 0 percent. The reductions were apparently a result of unexpectedly strong improvement in sales trends, and left balance in the assessment of current stocks. The net percent of owners planning to add to inventory was unchanged at a net 4 percent, in sympathy with the more widespread reduction in stocks. Inventory investment might have been even stronger in light of the liquidation had expectations for real sales gains improved rather than softened.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the June 9 Doug Short post titled “Small Business Optimism Rises:  Best Reading Since December“:

NFIB Small Business Optimism

Further details regarding small business conditions can be seen in the full May 2015 NFIB Small Business Economic Trends (pdf) report.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2082.66 as this post is written

NFIB Small Business Optimism – March 2015

The March NFIB Small Business Optimism report was released yesterday, April 14, 2015. The headline of the Small Business Economic Trends report is “In Rare Occurrence, All Ten Components Of NFIB Small Business Optimism Index Weakened.”

The Index of Small Business Optimism decreased 2.8 points in March to 95.2.

Here are some excerpts from that I find particularly notable (but don’t necessarily agree with):

INVENTORIES AND SALES

The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior 3 months improved 3 points, to a net negative 3 percent. Certainly consumer spending has not shown much energy in the past few months. Eleven percent cited weak sales as their top business problem, down 1 point. Expected real sales volumes posted a 2 point decline, falling to a net 13 percent of owners expecting gains, after a 5 point decline in January and February. Sales prospects are still looking reasonably good to owners, just not as hot as in the fourth quarter last year.

After 4 months of positive inventory investment, the pace of inventory investment reversed direction, with a net negative 4 percent of all owners reporting growth in inventories (seasonally adjusted). The net percent of owners viewing current inventory stocks as “too low” deteriorated 3 points to a net negative 5 percent, indicating that inventories are excessive when compared to expected sales volumes. The net percent of owners planning to add to inventory stocks fell 3 points to 1 percent, positive, but not a large force behind inventory investment in Q2.

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CAPITAL SPENDING

Fifty-eight percent reported outlays, down 2 points.  Spending has not caught fire in spite of historically low interest rates. There is too much uncertainty and expected growth is too soft. Of those making expenditures, 40 percent reported spending on new equipment (down 3 points), 24 percent acquired vehicles (down 1 point), and 14 percent improved or expanded facilities (down 2 points). Eight percent acquired new buildings or land for expansion (unchanged) and 10 percent spent money for new fixtures and furniture (down 2 points). The percent of owners planning capital outlays in the next 3 to 6 months fell 2 points to 24 percent, not a strong reading historically. Of the 42 percent of owners who said it was a bad time to expand (down 1 point), 21 percent (down 2 points) still blamed the political environment.

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CREDIT MARKETS

Five percent of owners reported that all their credit needs were not met, up 2 points but historically low. Thirty-five percent reported all credit needs met, and 48 percent explicitly said they did not want a loan. For most of the recession, record numbers of firms have been on the “credit sidelines”, seeing no good reason to borrow. Only 3 percent reported that financing was their top business problem. Thirty-two percent of all owners reported borrowing on a regular basis, up 2 points. The average rate paid on short maturity loans rose 60 basis points to 5.7 percent. Loan demand remained historically weak. The net percent of owners expecting credit conditions to ease in the coming months was a negative 6 percent, a 2 point deterioration. Interest rates are low, but prospects for putting borrowed money profitably to work have not improved enough to induce owners to step up their borrowing and spending.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the April 14 Doug Short post titled “Small Business Optimism:  A Nine-Month Low“ :

NFIB Small Business Optimism Index

Further details regarding small business conditions can be seen in the full March 2015 NFIB Small Business Economic Trends (pdf) report.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2095.84 as this post is written

NFIB Small Business Optimism – January 2015

The January NFIB Small Business Optimism report was released today, February 10, 2015. The headline of the Small Business Economic Trends report is “NFIB:  Small Business Optimism Falls, But Still In Normal Zone.”

The Index of Small Business Optimism decreased 2.5 points in January to 97.9.

Here are some excerpts from that I find particularly notable (but don’t necessarily agree with) :

OPTIMISM INDEX

The Small Business Optimism Index fell 2.5 points to 97.9, giving back the December gain that took the Index over 100. Still, the Index indicates that the small business sector is operating in a somewhat “normal” zone. Seven components fell, one was unchanged and 2 rose a bit. Most of the decline was accounted for by expected business conditions (43 percent of the decline), expected real sales (14 percent) and earnings (14 percent). The good news was the increase in the percent of owners reporting hard to fill openings and the drop of only 1 point in the net percent of owners planning job creation from December’s very good number.

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LABOR MARKETS

The percent of owners reporting job creation fell 4 percentage points to a net 5 percent of owners, still a solid number. Thirteen percent report increasing employment an average of 3.1 workers while 8 percent reduced their workforce by an average of 3.2 workers. Forty-eight percent reported hiring or trying to hire (down 6 points), but 42 percent reported few or no qualified applicants for the positions they were trying to fill. Fourteen percent reported using temporary workers, unchanged. Twenty-six percent of all owners reported job openings they could not fill in the current period, up 1 point and a very solid reading. The net percent of owners planning to create new jobs gave up 1 point from December’s excellent reading, providing evidence that the December number was not a fluke. A net 14 percent planning to create new jobs is a strong reading.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the February 10 Doug Short post titled “Small Business Optimism:  Index Relinquishes Some of Its December Advance“ :

NFIB Small Business Optimism January 2015

Further details regarding small business conditions can be seen in the full January 2015 NFIB Small Business Economic Trends (pdf) report.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2068.59 as this post is written

NFIB Small Business Optimism – December 2014

The December NFIB Small Business Optimism report was released today, December 9, 2014. The headline of the Small Business Economic Trends report is “NFIB:  Small Business Optimism Perks Up In December. ”

The Index of Small Business Optimism increased 2.0 points in November to 98.1.

Here are some excerpts from that I find particularly notable (but don’t necessarily agree with) :

The Small Business Optimism Index gained 2.0 points, taking the Index to its highest level since February 2007. The average of the Index from 1974Q4 to 2014 to date is 98, which includes all the Great Recession readings. What didn’t improve were the four “hard” Index components: job creation plans, plans for capital outlays, job openings and inventory investment plans, together adding a negative 1 percentage point to the Index. The entire gain in the Index was accounted for by two components: Expectations for Business Conditions in Six Months and Expectations for Real Sales Volumes, adding a combined 21 percentage points to net favorable responses, perhaps a response to the November election results.

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The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior 3 months fell 1 point to a net negative 4 percent, a rather poor picture and inconsistent with the rise in optimism – bottom line, it is customers that bring joy and improve optimism. Twelve percent cited weak sales as their top business problem, one of the lowest readings since December, 2007, unchanged from October. Expected real sales volumes posted a 5 point gain, rising to a net 14 percent of owners expecting gains.

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Four percent of the owners reported that all their credit needs were not met, holding at the historic low. Twenty-nine percent reported all credit needs met, and 54 percent explicitly said they did not want a loan. Only 3 percent reported that financing was their top business problem. Thirty-three percent of all owners reported borrowing on a regular basis, up 5 points and high compared to recent experience. The average rate paid on short maturity loans increased 10 basis points to 5.6 percent. The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative 6 percent; 1 point worse than October.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the December 9 Doug Short post titled “Small Business Optimism – A Seven-Year High“ :

NFIB Small Business Optimism

Further details regarding small business conditions can be seen in the full December 2014 NFIB Small Business Economic Trends report (pdf).

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2039.20 as this post is written

NFIB Small Business Optimism – October 2014

The October NFIB Small Business Optimism report was released today, October 14. The headline of the Press Release is “NFIB:  Small Business Optimism Index Declines in September. ”

The Index of Small Business Optimism decreased .8 points in September to 95.3.

Here are some excerpts from the Press Release that I find particularly notable (but don’t necessarily agree with) :

September’s optimism index gave up 0.8 points, falling to 95.3. At 95.3, the Index is now 5 points below the pre-recession average (from 1973 to 2007). Four Index components improved, six declined.  Two declined by 10 points total, accounting for the entire decline in the Index score.  Unfortunately, the two that fell drastically were job openings and planned capital outlays, which are directly relevant to GDP growth and hiring.

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Sales.  The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior 3 months deteriorated 2 points to a net negative 4 percent. Fourteen percent cited weak sales as their top business problem, one of the lowest readings since December 2007, but up 1 point from August.   Expected real sales volumes posted a 1 point decline, falling to a net 5 percent of owners expecting gains after dropping 4 points in August.   Overall, these readings are more like a recession period than one of expansion.

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Inventories. The pace of inventory reduction accelerated, with a net negative 7 percent of all owners reporting growth in inventories (seasonally adjusted).  Clearly firms are liquidating stocks faster than adding to them.   With sales trends weakening, the reductions in inventories are not surprising.

The net percent of owners viewing current inventory stocks as “too low” improved a point to a net negative 0 percent, a very balanced reading. Sales trends continued to deteriorate a bit but remained near the best levels in the recovery, just historically weak.  Expected real sales did not improve, and this contributed to less urgency to rebuild stocks.  The net percent of owners planning to add to inventory stocks rose 1 point to a net 2 percent.  While inventory accumulation can add to GDP growth, there isn’t much “juice” in the small business sector to contribute.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the October 14 Doug Short post titled “Small Business Optimism Drops“ :

Dshort 10-14-14 - NFIB-optimism-index 95.3

Further details regarding small business conditions can be seen in the Small Business Economic Trends document as well as the full October 2014 NFIB Small Business Economic Trends report (pdf).

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1874.74 as this post is written

NFIB Small Business Optimism – August 2014

The August NFIB Small Business Optimism report was released today, August 12.  The headline of the Press Release is “NFIB SBET: Small Business Optimism Ticks Up Slightly.”

The Index of Small Business Optimism increased .7 points in July to 95.7.

Here are some excerpts from the Press Release that I find particularly notable (but don’t necessarily agree with) :

July’s Optimism Index technically rose 0.7 points to a reading of 95.7. There was little change in the 10 Index components other than outlook for expansion and business conditions which accounted for the small gain in the Index. Even though these improved, they still remain historically low.

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•    Sales.  The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past 3 months compared to the prior 3 months fell 1 point to a net negative 3 percent,  still one of the very best readings since 2007. Thirteen percent cited weak sales as their top business problem, one of the lowest readings since December, 2007, the peak of the expansion. Expected real sales volumes posted a 1 point decline, falling to a net 10 percent of owners expecting gains. 

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•    Credit Markets. Six percent of the owners reported that all their credit needs were not met, unchanged and only 2 points above the record low. Thirty percent reported all credit needs met, and 52 percent explicitly said they did not want a loan. Only 2 percent reported that financing was their top business problem compared to 22 percent citing taxes, 22 percent citing regulations and red tape and 13 percent citing weak sales. 

The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative 5 percent; more owners expect that it will be “harder” to arrange financing than easier (a 2 point improvement). This is the most favorable reading about credit market conditions since 2006, occurring at a time when the Fed is terminating its aggressive QE3 policy.  

Here is a chart of the NFIB Small Business Optimism chart, as seen in the August 12 Doug Short post titled “Small Business Sentiment:  ‘Optimism Ticks Up Slightly’“ :

NFIB Small Business Optimism Index

Further details regarding small business conditions can be seen in the Small Business Economic Trends document as well as the full August 2014 NFIB Small Business Economic Trends report (pdf).

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1930.33 as this post is written

NFIB Small Business Optimism – June 2014

The June NFIB Small Business Optimism report was released today, June 10.  The headline of the Press Release is “Small Business Sentiment – Improves a Bit But Is No Sign Of A Surge.”

The Index of Small Business Optimism increased 1.4 points in May to 96.6.

Here are some excerpts from the Press Release that I find particularly notable (but don’t necessarily agree with) :

NFIB Optimism Index rose 1.4 points in May to 96.6, the highest reading since September 2007.  However, while May is the third up month in a row, the Index is still far below readings that have normally accompanied an expansion and there have been similar gains in the past that haven’t panned out in this recovery period. Five Index components improved, one was unchanged and four fell, although not by much.  

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•    Labor Markets.  NFIB owners increased employment by an average of 0.11 workers per firm in May (seasonally adjusted), the eighth positive month in a row and the best string of gains since 2006.  Seasonally adjusted, 11 percent of the owners (down 2 points) reported adding an average of 3.0 workers per firm over the past few months. 

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•    Credit Markets. Five percent of the owners reported that all their credit needs were not met, unchanged and 1 point over the record low.  Thirty percent reported all credit needs met, and 53 percent explicitly said they did not want a loan.  Only 3 percent reported that financing was their top business problem compared to 25 percent citing taxes, 20 percent citing regulations and red tape and 12 percent citing weak sales. Owners remain more concerned about taxes, regulations and health insurance costs.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the June 10 Doug Short post titled “Small Business Sentiment:  Third Month of Improvement“ :

NFIB Small Business Optimism

Further details regarding small business conditions can be seen in the Small Business Economic Trends document as well as the full June 2014 NFIB Small Business Economic Trends report (pdf).

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1951.27 as this post is written

NFIB Small Business Optimism – April 2014

The April NFIB Small Business Optimism report was released today, April 8.  The headline of the Press Release is “NFIB:  Small-Business Owner Roller Coaster Continues.”  The subtitle is “After February’s Decline, Confidence Up in March”

The Index of Small Business Optimism increased 2.0 points in March to 93.4.

Here are some excerpts from the Press Release that I find particularly notable (but don’t necessarily agree with) :

“Overall, the March gain more or less reversed the February decline. While the Index still can’t seem to get above 95, we can be encouraged that the economy is at least crawling forward and not heading in reverse,” said NFIB chief economist Bill Dunkelberg. The outlook for real sales gains accounted for about half of the improvement with inventory satisfaction and inventory investment plans accounting for most of the rest. However, throughout this recovery we’ve seen these types of increases only to have them go nowhere. As long as Washington continues to ignore policies that could restore the middle class, job creation will continue to be sub-par.”

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Credit Markets. Credit continues to be a non-issue for small employers. In March only 5 percent of owners reported that all their credit needs were not met, 1 point above the record low.  Thirty percent reported all credit needs met, and 48 percent explicitly said they did not want a loan.  Only 2 percent reported that financing was their top business problem compared to 21 percent citing taxes, 21 percent citing regulations and red tape and 14 percent citing weak sales.

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Inflation.  Twelve percent of the NFIB owners reported reducing their average selling prices in the past 3 months (down 3 points), and 23 percent reported price increases (up 4 points).  Seasonally adjusted, the net percent of owners raising selling prices was a net 9 percent, up 8 points.  Only 3 percent plan reductions (unchanged), far fewer than actual reported reductions. Seasonally adjusted, a net 19 percent plan price hikes (down 4 points).  If successful, the economy may see a bit more “inflation”.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the April 8 Doug Short post titled “Small Business Sentiment improved in March“ :

NFIB Small Business Optimism Index

Further details regarding small business conditions can be seen in the Small Business Economic Trends document as well as the full April 2014 NFIB Small Business Economic Trends report (pdf).

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1849.22 as this post is written

NFIB Small Business Optimism – February 2014

The February NFIB Small Business Optimism report was released today, February 11.  The headline of the Press Release is “Small Business Confidence Edges Up, Ever So Slightly.”  The subtitle is “Main Street Still Cautious About The Future.”

The Index of Small Business Optimism increased .2 points in January to 94.1.

Here are some excerpts from the Press Release that I find particularly notable (but don’t necessarily agree with) :

Small business optimism started the year slightly up from December at 94.1 but well below the pre-recession average of 100, according to the National Federation of Independent Business’ (NFIB’s) latest index. On the positive front, owners did find a reason to be more positive about their own sales (a huge 7 point jump in positive expectations) and plan more hiring, with the strongest job creation plans since 2007. However, owners continue to find inventories “too high” and sales and earnings trends continued to deteriorate for more owners. Overall, the Index is still just treading water.

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Capital Outlays. The percent of owners planning capital outlays in the next 3 to 6 months fell 2 points to 24 percent. Eight percent characterized the current period as a good time to expand facilities (down 2 points).  Of those who said it was a bad time to expand (59 percent), 27 percent still blamed the political environment, suggesting that at least for these owners, Washington is preventing their spending on expansion.  The net percent of owners expecting better business conditions in 6 months was a net negative 11 percent, unchanged from December.  Not seasonally adjusted, 19 percent expected an improvement in business conditions (up 2 points), and 23 percent expect deterioration (down 4 points).  A net 15 percent of all owners expect improved real sales volumes, up a huge 7 points, a favorable sign.  Overall, it looks like “maintenance mode”, no breakout in spending on the horizon based on these expectations with the exception of expected real sales.

Here is a chart of the NFIB Small Business Optimism chart, as seen in the February 11 Doug Short post titled “Small Business Sentiment:  A Fractional Improvement, but ‘Losing Steam’“ :

Dshort 2-11-14 - NFIB-optimism-index

Further details regarding small business conditions can be seen in the Small Business Economic Trends document as well as the full February 2014 NFIB Small Business Economic Trends report (pdf).

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1799.84 as this post is written