383 posts on "Liberty Street Economics"
August 19, 2026
Has Broader Stock Market Participation Changed How Interest Rates Affect the Economy?
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.
August 11, 2026
How Distressed Are Consumers? Reconciling Diverging Credit Card Delinquency Measures
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.
August 10, 2026
Stripping STRIPs Trading Activity
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 […]
August 4, 2026
A Window into Bond Investors’ Uncertainty About R‑Star
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 17, 2026
Nonbank Subsidiaries and the Hidden Fragility of Internal Capital Markets Reallocation
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.”
July 16, 2026
How Basel III Changes Where Capital Sits: Nonbank Subsidiaries as Equity Reservoirs
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.”
July 15, 2026
Capitalizing on Nonbanks: Regulatory Arbitrage Within Bank Holding Companies
This post is the first in a three-part series on how bank regulation interacts with the organizational structure of banking firms. The series draws on the authors’ recent Staff Report, “Regulatory Arbitrage Within the Firm.”
July 9, 2026
Effect of Tariffs on U.S. Small Businesses
How has the recent implementation of tariffs affected small businesses? Due to lack of data, little is known about this issue. In this Liberty Street Economics post, we use data from the 2025 edition of the Small Business Credit Survey (SBCS) to explore this question for businesses nationally and in the Second District (defined, for the purpose of this study, as New York, New Jersey, and Connecticut). We find that the majority of national firms in the goods and retail sectors reported experiencing financial challenges due to tariffs in 2025, with even larger shares of regional firms doing so. In response, about 80 percent of national and regional firms passed on at least some of the higher costs of imported inputs to customers, while about 60 percent absorbed some of the costs, as many firms did some of both. Firms that faced greater tariff challenges in 2025 were more pessimistic about employment and revenues in 2026.
July 8, 2026
More Tariff Pass‑Through Is in the Pipeline
The past year brought dramatic changes to U.S. trade policy, including sweeping new tariffs, as well as a Supreme Court decision that further reshaped the tariff landscape. Many businesses saw their costs increase significantly and faced complex decisions about whether to absorb the tariffs through lower profit margins, raise their prices to recover the higher costs, or some combination of the two. Last year, we found that most businesses had passed on at least some of these higher costs to their customers through higher prices. Now, over a year later, have businesses finished adjusting prices, or do further tariff-induced price increases lie ahead? Our latest regional business surveys reveal that nearly half of firms that have paid tariffs still plan additional price increases to offset these costs, with some expecting to raise prices six months or more in the future.
July 7, 2026
Using AI to Let History Speak About Bank Runs
Banking crises are commonly associated with bank runs and banking panics, yet our empirical understanding of bank runs is constrained by a lack of bank-level data. In a new paper, we use large language models (LLMs) to extract information on bank runs from millions of digitized historical newspaper pages, creating the most comprehensive database of bank runs in U.S. history. Every bank run episode that we identify is documented on a companion website where users can browse and examine individual episodes, and read the original newspaper articles. In this post, we describe how we built this dataset and discuss what its basic features reveal.
RSS Feed
Follow Liberty Street Economics
