Liberty Street Economics

August 19, 2026

Has Broader Stock Market Participation Changed How Interest Rates Affect the Economy?

Juan M. Morelli

Close-up of a stock market chart displaying financial data and trading trends.

Stock market participation in the U.S. has changed dramatically over the past four decades. In the mid-1980s, fewer than 30 percent of households held equity. By the early 2000s, more than half of U.S. households owned equity, either directly or through mutual funds, 401(k)s, and IRAs. As participation widened, the way stock market fluctuations passed through to household spending may have changed, with potential implications for how the broader economy behaves. An argument can be made that the rise in equity market participation has dampened the response of output to interest rate changes as stock market fluctuations are now spread across a larger share of households, moderating movements in consumer spending, asset prices, and investment spending.

Posted at 7:00 am in Household Finance, Monetary Policy, Stocks | Permalink | Comments (0)

August 12, 2026

Does the Equity Term Structure Respond to Monetary Policy Shocks?

Henry Dyer and Tomas Jankauskas

Decorative image of stock price board superimposed on the Federal Reserve building in Washington, D.C.

A long-standing body of research, inspired by Bernanke and Kuttner (2005), has documented the effects of Fed interest rate surprises on stock markets. While stock markets provide valuable information about the investor risk premium and dividend growth expectations, researchers have only recently developed more comprehensive tools to estimate the term structure of equity risk premia and dividend growth expectations across a broad range of maturities. In this post, we investigate the impact of monetary policy surprises (or shocks) on short- and long-term estimates of risk premia and growth expectations through the lens of the Giglio, Kelly, and Kozak (2024) model.

Posted at 7:00 am in Financial Markets | Permalink | Comments (0)

August 11, 2026

How Distressed Are Consumers? Reconciling Diverging Credit Card Delinquency Measures

Donghoon Lee, Daniel Mangrum, Joelle W. Scally, Tejas Sinha, and Wilbert van der Klaauw

Serious young Black bank customer woman paying for purchase, domestic fees, bills by blue plastic credit card, using online payment app on smartphone, shopping on internet stores

Total debt balances declined slightly by $13 billion in the second quarter of 2026, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. Mortgage and student loan balances saw a small decline, while there were increases across other debt products. Delinquency rates across most products remained fairly stable. Still, between 2022:Q3 and 2026:Q1, the percentage of credit card balances 90+ days delinquent rose from 7.6 percent to 12.8 percent, prompting concerns that Americans are falling behind on their debt payments at rates not seen since the Great Recession. Yet the flow delinquency rate—which captures the rate of new delinquencies—has remained relatively stable for almost two years. In this post, we use data from the New York Fed Consumer Credit Panel (CCP) to better understand the state of the consumer, and to explain the difference between our two measures of delinquency. We find that the stock delinquency rate is rising because of a pool of stale, charged-off debts that lenders have been reporting for longer durations, rather than a fundamental worsening in the incidence of delinquency.

Posted at 11:00 am in Credit, Household Finance | Permalink | Comments (2)

August 10, 2026

Stripping STRIPs Trading Activity

Michael J. Fleming and Or Shachar

United States Treasury Department building

In March 2020, the Financial Industry Regulatory Authority (FINRA) began reporting aggregate trading volume for securities issued by the U.S. Treasury Department. The public data do not, however, include information about the trading activity of Separate Trading of Registered Interest and Principal of Securities (STRIPS). STRIPS are created from existing Treasury securities and offer risk […]

Posted at 7:00 am in Financial Markets, Treasury | Permalink | Comments (0)

August 6, 2026

Why Do Fewer Renters Expect to Move?

Christopher Gresh, Andrew F. Haughwout, Eungik Lee, and Wilbert van der Klaauw

Young woman and her friend packing their belongings while preparing to move out of apartment.

Americans are moving less than they used to. Moving rates have declined steadily for decades, falling from close to 20 percent annually in the mid-1980s to below 10 percent by 2019. This decline has persisted through business cycles and has been evident across all regions, and has affected a broad range of demographic groups. Falling mobility matters because moving helps households access job opportunities, adjust to changing circumstances, and improve their housing situations. In this post, we show that the decline in mobility also holds for renters, with growing challenges to owning a home being an important contributing factor. We use data from the annual New York Fed SCE Housing Survey to study renters’ expected mobility and the factors that shape it. Renter mobility is important as renters account for roughly a third of U.S. households and, unlike homeowners, are not subject to mortgage rate lock-in. Since expected mobility predicts actual moving behavior, it provides an early signal of where residential mobility is headed before moves occur.

Posted at 7:00 am | Permalink | Comments (1)

August 5, 2026

AI’s Impact on Labor and Hiring

Kartik B. Athreya

Street level column by Research Director Kartik Athreya. Image of Athreya on top of a photo of a large room with rows of desks and laptops with only one man sitting at one desk working.

Welcome to Street Level, my new series on Liberty Street Economics. As research director, I try to keep track of the wide range of work that the economists at the New York Fed produce. My goal for this series is to periodically offer some thematic discussion of that work, highlighting recent analysis by Research staff and adding my own observations on the issue at hand. In this inaugural post, I’ll focus on perhaps the hottest topic going: How artificial intelligence is changing the labor market and hiring behaviors.

Posted at 7:00 am in Artificial Intelligence (AI) | Permalink | Comments (0)

August 4, 2026

A Window into Bond Investors’ Uncertainty About R‑Star

Guillaume Roussellet

Image of an interest rate sign with a magnifying glass hovering over it. Black and gray background with interest rates in gray on it.

Monetary policymakers closely monitor the term structure of sovereign bond yields to uncover market participants’ beliefs about the future monetary policy stance, inflation, and activity. A particular object of interest is the natural real rate of return, or “r-star,” which acts as a guide for monetary policy decisions. Numerous papers have questioned how much information investors possess, and how precisely they know r-star. In this post based on a recent Staff Report, we explore what the term structure of interest rates can teach us about r-star and its perception by investors.

Posted at 7:00 am in Central Bank, Financial Markets, Inflation, Macroeconomics, Monetary Policy | Permalink | Comments (0)

July 31, 2026

Stablecoins and (Non)Crypto Shocks: A 2026 Update

Kenechukwu Anadu, Pablo D. Azar, Sean Baker, Marco Cipriani, Thomas M. Eisenbach, Mattia Landoni, Gabriele La Spada, Marco Macchiavelli, and J. Christina Wang

decorative image of bar chart and circle with stablecoin written on dark background.

Stablecoins are digital assets whose value is pegged to that of a fiat currency, typically the U.S. dollar at a peg of $1.00 per token. In a previous blog post, we described the rapid growth of stablecoins through early 2025, highlighted changes in stablecoins’ reserve-asset composition, and examined their reactions to Bitcoin price shocks. In this post, we document the growth of stablecoins since our last post. Then, we examine how shocks from outside the crypto industry can impact the composition of stablecoins’ reserve assets. For our case study, we use the 2023 failure of Silicon Valley Bank (SVB) and its impact on USD Coin (USDC, issued by Circle), the second-largest stablecoin by market capitalization.

Posted at 7:00 am in Cryptocurrencies | Permalink | Comments (0)

July 17, 2026

Nonbank Subsidiaries and the Hidden Fragility of Internal Capital Markets Reallocation

Nicola Cetorelli and Shohini Kundu

AI generated image of a glass square vessel with glass squares and pyramid inside with the words Bank Holding Company on the large vessel and insurer, fintech and broker-dealer on the small glass items inside it.

This post concludes a three-part series on how bank regulation interacts with the organizational structure of banking firms. The first post documented the equity-rich nonbank subsidiaries inside bank holding companies (BHCs); the second post showed that BHCs met Basel III by reallocating capital internally, moving equity from nonbank affiliates to bank subsidiaries rather than raising new external capital. Here we ask what that reallocation meant for financial stability. The series draws on the authors’ recent Staff Report, “Regulatory Arbitrage Within the Firm.”

Posted at 7:00 am in Banks, Nonbank (NBFI), Regulation | Permalink | Comments (1)

July 16, 2026

How Basel III Changes Where Capital Sits: Nonbank Subsidiaries as Equity Reservoirs

Nicola Cetorelli and Shohini Kundu

This post is the second in a three-part series on how bank regulation interacts with the organizational structure of banking firms. The first post documented that nonbank subsidiaries inside bank holding companies (BHCs) are large, equity-rich “reservoirs,” and that bank-level capital diverged sharply from consolidated capital after Basel III took effect in 2015. This post asks why, and traces the answer through the internal plumbing of the holding company. The series draws on the authors’ recent Staff Report, “Regulatory Arbitrage Within the Firm.”

Posted at 9:00 am in Banks, Nonbank (NBFI), Regulation | Permalink | Comments (0)

Markets & Policy Implementation

Liberty Street Economics

Has Broader Stock Market Participation Changed How Interest Rates Affect the Economy?

Does the Equity Term Structure Respond to Monetary Policy Shocks?

How Distressed Are Consumers? Reconciling Diverging Credit Card Delinquency Measures

Stripping STRIPs Trading Activity

Why Do Fewer Renters Expect to Move?

AI’s Impact on Labor and Hiring

A Window into Bond Investors’ Uncertainty About R‑Star

Stablecoins and (Non)Crypto Shocks: A 2026 Update

Nonbank Subsidiaries and the Hidden Fragility of Internal Capital Markets Reallocation

How Basel III Changes Where Capital Sits: Nonbank Subsidiaries as Equity Reservoirs

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