The US markets were down slightly last week as fear over fiscal issues in the Euro Zone resurfaced. Who could have ever anticipated that an island country known as Cyprus in southeastern Europe, in the eastern Mediterranean Sea with a population of about 775,000, could cause such a global economic scare?

Cyprus was front and center of most global economic media last week as the country announced they were headed towards certain bankruptcy without outside help from the European Central Bank and the IMF. The Cyprus government froze all bank assets and announced shocking plans to impose huge taxes on all bank accounts as a way to stabilize their financial system. This came as a huge surprise to Cyprus citizens and people around the world. This news had many US citizens worried that a tax like this could become a reality for them if our own country’s spending habits do not come under control. However, analysts were quick to point out that the likelihood of something like this occurring in the US is still very improbable. US Federal Reserve Chairman, Ben Bernanke, commented on the Cyprus situation on Wednesday of last week saying that he does not consider them as much of a risk for the US economy but they could represent more of a short-term risk to Europe and Russia.

Despite the uncertainty in Cyprus, the US housing market continued its recovery last week with more positive news. Housing starts experienced a 0.8% increase in February, following a 7.3% drop from the month before (up 27.7% on a year-ago basis). Housing permits rose 4.6% in February to an annualized pace of 0.946 million units. This is all good news for the housing market and the US economy as analysts believe this should increase construction employment and consumer confidence over the coming months.

Jobless claims continue to signal an overall recovery in the labor market. While initial claims did inch up by 2,000 for the week of March 16th, the four week average is still down 7,500 to 339,750, which represents a new recovery low.