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I don't think Jay Powell wants to make news today/Small business mood/Corporate America still sees mixed things

I don't think Jay Powell wants to make news today/Small business mood/Corporate America still sees mixed things

Peter Boockvar
Feb 11, 2025
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I'm guessing that Jay Powell today in his testimony and Q&A in front of the Senate Banking Committee is going to do his best to not lean in any one direction when it comes to rates, especially with still a month to go before the next FOMC gathering. Also, how can anyone have much confidence in forecasting growth and inflation trends in light of the weekly tariff possibilities, some threatened, some implemented at the same time we await the plans to extend the expiring tax cuts.

After a very optimistic response in November and December to the Trump win, the NFIB small business optimism index slipped back a bit in January to 102.8 from 105.1 and vs 101.7 in November though still well above the 93.7 in October. There were slight pullbacks in most of the categories. The one that stands out was the 7 pt drop in the 'Increased Capital Spending' category after the jump in the two prior months.

Also, higher for longer interest rates still really matters as the average rate paid on a loan was 9.4% vs 8.7% in December. For perspective, it averaged 6.2% over the past 20 years.

The bottom line from the NFIB, "Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise. Hiring challenges continue to frustrate Main Street owners as they struggle to find qualified workers to fill their many open positions. Meanwhile, fewer plan capital investments as they prepare for the months ahead."

I'll add, in terms of visibility with tariffs, as we know they are here with more coming, ideally, they all come sooner rather than later so business can start planning around them now rather than being in complete limbo wondering if they get hit and when.

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