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2026
Supply Chain Risk and Bank Lending Amid Trade Policy Uncertainty
During times of increased trade policy uncertainty and geopolitical tensions, supply chain disruptions can be an important source of instability. Due to the interconnected nature of modern economies, problems in one market can often ripple across others, triggering logistical bottlenecks and longer delivery times.
DOI: https://doi.org/10.17016/2380-7172.3996
Model Perspectives on Supply and Demand Factors behind a Soft Labor Market
U.S. employment growth slowed down notably in the second part of 2025, and a key question is how much of the weakness stems from labor demand and how much from labor supply. In this note, we examine this question from the point of view of two different models: a statistical model that uses an intuitive interpretation of the joint behavior of employment and wage growth to infer the effects of labor supply and demand (VAR), and a structural dynamic stochastic general equilibrium (DSGE) model that uses a much wider array of data.
DOI: https://doi.org/10.17016/2380-7172.3959
Bankers’ Banks and their Role in the Federal Funds Market
The Global Financial Crisis (GFC) and the Federal Reserve's (Fed) large-scale asset purchases fundamentally reshaped the U.S. monetary policy implementation framework. Before 2008, the Fed operated under a scarce-reserves regime, steering the federal funds rate through daily open market operations.
DOI: https://doi.org/10.17016/2380-7172.3969
Lessons from Brexit on the Effects of Trade Disintegration
Recent U.S. trade policy changes have rekindled interest in Brexit, as it represents one of the few instances in which another large advanced economy implemented substantial trade policy changes. In this note, we answer two questions: How similar were trade policy adjustments in Brexit to U.S. trade policy changes of 2025? What were the short- and long-run effects of Brexit on the U.K. economy?
DOI: https://doi.org/10.17016/2380-7172.3984
More Credit, More Debt: New Evidence on Automated Credit Decisions
Behind the scenes of every credit card lies an increasingly complex algorithmic infrastructure that determines who receives more credit and when, largely outside the inspection or knowledge of credit card users. Credit card issuers deploy sophisticated algorithms that continuously analyze consumer spending and borrowing behaviors, often increasing credit limits without consumers requesting such changes.
DOI: https://doi.org/10.17016/2380-7172.3964
The Central Bank Balance-Sheet Trilemma
Between December 2005 and December 2025, the Federal Reserve's balance sheet grew from about $800 billion to roughly $6.5 trillion—an increase from around 6 percent to 21 percent of GDP. This expansion primarily reflected two policy decisions by the FOMC.
DOI: https://doi.org/10.17016/2380-7172.3979
Assessing Recession Risks with State-Level Data
This note evaluates recession risks at the national and state levels using a state-of-the-art Bayesian Markov-switching model that distinguishes between full-recovery recessions (U-shaped recessions) and those that generate lasting damage, or hysteresis (L-shaped recessions). While states exhibit considerable heterogeneity in their business-cycle experiences, most saw some degree of hysteresis in the past recessions that occurred prior to the COVID pandemic. By contrast, the model classifies the pandemic-induced recession as a full-recovery episode with a low likelihood of hysteresis, reflecting the rapid rebound from the sharp downturn. The model suggests that the risk of a national recession has been low of late, though the state-level data reveal pockets of risk.
DOI: https://doi.org/10.17016/2380-7172.3992
Disclaimer: FEDS Notes are articles in which Board staff offer their own views and present analysis on a range of topics in economics and finance. These articles are shorter and less technically oriented than FEDS Working Papers and IFDP papers.