Institutional investment managers are becoming increasingly positive on the U.S. economy, but remain concerned about macro risks such as the European debt crisis, according to a survey conducted in the first quarter of 2012 by Northern Trust. A large portion of managers also believe that correlations between equities will begin to move lower, after reaching record highs in the fall of 2011. The survey of 100 institutional managers, conducted in mid-March by Northern Trust’s Multi-Managers Solutions group, showed a meaningful increase in positive expectations for the U.S. economy over surveys taken in previous quarters. Nearly half (49 percent) of managers expect GDP growth to accelerate over the next six months, up from 29 percent in the fourth quarter of 2011. Managers also remain confident in corporate earnings; in fact, more than three-quarters anticipate earnings growth will remain stable or accelerate throughout 2012. The outlook for job growth in the United States remains favorable, with 33 percent of respondents expecting a pick-up in job growth and 49 percent expecting job growth to be stable over the next six months. The biggest threat to equity markets remains the situation in Europe followed by domestic concerns, such as the impact of the U.S. elections and the U.S. sovereign debt level. “Despite continuing concern about the situation in Europe, institutional investment managers saw more positive economic and financial market signals in the first quarter this year than they did at the end of 2011," said Chris Vella, Chief Investment Officer for Northern Trust’s Multi-Managers Solutions group. "For example, 40 percent of managers believe market volatility will decline from current levels. Lower volatility combined with lower correlations between equities should benefit bottom-up, fundamentally focused investment managers." Forty percent of managers surveyed believe correlations among equities should move lower over the next six months. Correlations among equities reached record-high levels in late-2011.