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Detailed Close-up of an AI Chip on a Circuit Board
AI's Macroeconomic Challenges and Promises
In the third quarter of 2025, America's largest tech firms for the first time spent more on capital investment than they earned from operations. The implication is that AI, a technology with the potential to make the economy more productive, is, for now, absorbing resources faster than it is generating returns. The author discusses how the tension between AI's long-run promise and its short-run costs affects the outlooks for inflation, real activity, and financial stability.
By Simone Lenzu
AI generated image of a globe with arrows showing cycles around it on a blue background with international currency symbols.
The Global Credit Cycle in Corporate Bond Returns
The global corporate nonfinancial bond market is both a large investment asset class and a vital source of funding for nonfinancial firms. Yet, in 37 percent of months between 1998 and 2024, more than 80 percent of bonds in the ICE Global Bond Indices moved in the same direction, suggesting a large degree of synchronization. The authors introduce the global credit factor, which creates a global credit cycle in bond risk premia and generates predictable co-movement in bond prices.
By Nina Boyarchenko and Leonardo Elias
Honey, Who Shrunk the U.S. Income Surplus?
Foreign holdings of U.S. financial assets are immense, with current official estimates of $69 trillion. U.S. holdings of foreign assets are impressive but much smaller, at $41 trillion. This shortfall has been mounting for decades. Yet U.S. investment income receipts comfortably exceeded income payments until recently. The authors show that the fading of the investment income surplus stems from the post-pandemic upward shift in interest rates along with the continued net sales of U.S. assets to foreign investors.
By Thomas Klitgaard and Matthew Higgins
Do Job Postings Show Early Labor-Market Effects of AI?
As generative AI tools become more widely used, a key issue is the technology’s impact on labor demand. The authors examine whether early evidence of AI’s effect on the labor market appears in firms’ job postings. They find that while overall hiring has slowed since 2022, the evidence from job postings provides little indication of a distinct AI-driven decline in labor demand.
By Richard Audoly, Miles Guerin, and Giorgio Topa
Image of back of college students in cap and gowns
Federal Student Loan Defaults Return After Pandemic Pause
Household debt balances held steady at $18.8 trillion during the first quarter of 2026, according to the latest Quarterly Report on Household Debt and Credit. However, the share of student loan balances past due increased, nearing pre-pandemic levels at just over 10 percent. The authors focus on which borrowers have defaulted on their federal student loans over the past two quarters, exploring the implications for credit access and the potential spillover effects on other credit products.
Zara Jacob, Donghoon Lee, Daniel Mangrum, Joelle W. Scally, and Wilbert van der Klaauw
Will Mounting Supply Chain Strains Hamstring the AI Investment Boom?
The conflict in the Middle East has precipitated a global supply shock, raising the specter of spillovers to the U.S. through both prices and physical shortages of goods. Asian supply chains, especially from middle- to lower-middle income countries in southeast Asia, are key suppliers for the goods needed for the AI infrastructure build-out in the U.S. These countries are also heavily reliant on Middle East energy imports. The authors examine key factors related to these Asian supply chain vulnerabilities.
By Hunter Clark, Jeff Dawson, and Shad Turney
RESEARCH TOPICS
Applied Macroeconomics
and Econometrics Center
The mission of the Applied Macroeconomics and Econometrics Center (AMEC) is to provide intellectual leadership in the central banking community in the fields of macro and applied econometrics.

Data Releases
Global Supply Chain Pressure Index
(Updated: Monthly)

Labor Market Tightness Index
(Updated: Monthly)

Measuring the Natural Rate of Interest
(Updated: Quarterly)

Multivariate Core Trend Inflation
(Updated: Monthly)

The New York Fed DSGE Model
(Updated: Quarterly)

New York Fed Staff Nowcast
(Updated: Weekly)

Outlook-at-Risk
(Updated: Monthly)

Treasury Term Premia
(Updated: Daily)

Yield Curve as a Leading Indicator
(Updated: Monthly)
Center for Microeconomic Data
AI generated, people walking in office building.
Labor Market Tightness Index
The HPW Labor Market Tightness Index is an indicator of labor market tightness for summarizing current wage pressures and predicting wage inflation.
Photo: a four-panel picture of people cleaning up after natural disasters
Losses from Natural Disasters
Losses from Natural Disasters provides county-level estimates of the economic and human impact of extreme weather events in the United States.
Reserve Demand Elasticity (RDE)
RDE estimates provide a quantitative measure of the ampleness of reserves in the U.S. banking system in real time. New data are published monthly.
Economic Heterogeneity Indicators (EHIs)
The EHIs are broad-based economic indicators that measure macroeconomic outcomes experienced by different demographic, economic, and geographic groups on both a regional and national level.
Corporate Bond Market Distress Index (CMDI)
The CMDI is a summary metric of corporate bond market functioning based on information from multiple sources including measures of primary market issuance and pricing, secondary market pricing and liquidity conditions, and the relative pricing between traded and nontraded bonds. It updates monthly.
Regional Surveys
Monthly surveys conducted by the New York Fed track the sentiment of executives at regional manufacturing and service-sector firms regarding business conditions.

Data Releases
Empire State Manufacturing Survey
(Updated: Monthly)

Business Leaders Survey
(Updated: Monthly)

Regional Business Surveys:
Special Topics
(Updated: Quarterly)
Regional Employment Trends
These interactive charts track employment in state and metro regions in the Federal Reserve’s Second District, utilizing the New York Fed’s early benchmarks of payroll employment data. It updates monthly.
Mapping Home Price Changes
Explore year-over-year changes in home prices since 2003, both regionally and nationally, using this dynamic map — updated with new home price index data on a monthly basis. Hover over a county for granular data.
Early Benchmarked Employment Data
Monthly releases of early benchmarked employment figures for New York State, New Jersey, Puerto Rico, and the U.S. Virgin Islands, as well as the metropolitan areas in New York and Northern New Jersey
The Labor Market for Recent College Graduates
Labor market conditions continued to be challenging for recent college graduates at the start of 2026. The unemployment rate remained elevated at about 5.7 percent in the first quarter of 2026, though the underemployment rate edged down to 41.5 percent.
Recent Publications
Regulatory Arbitrage Within the Firm
Regulation shapes the boundaries of firms. When prudential standards bind asymmetrically across subsidiaries of an integrated organization, internal capital markets become a mechanism for regulatory arbitrage. The authors study this in U.S. banking, where holding companies encompass both heavily regulated depository institutions and lightly regulated nonbank affiliates. They find that organizational structure is a fundamental determinant of regulatory outcomes.
Nicola Cetorelli and Shohini Kundu, Staff Report 1196, May 2026
Micro and Macro Cost-Price Dynamics in Normal Times and During Inflation Surges
Firms adjust output prices infrequently despite continuously evolving economic conditions, leading their prices to drift from those that maximize flow profits. The authors study cost-price dynamics in a cross-section of firms in order to jointly explain the time series of aggregate inflation and the frequency of price changes, both during normal times and inflation surges. Their analysis provides novel evidence and insights about the passthrough of costs into prices in both the cross-section of firms and aggregate time-series.
Luca Gagliardone, Mark Gertler, Simone Lenzu, and Joris Tielens, Staff Report 1195, May 2026
Bayesian Persuasion and Cryptography
Bayesian Persuasion assumes that a sender can commit ex ante to an information structure and then release the realized signal ex post. This paper asks when that commitment technology can itself be implemented. The author defines “Receiver-Private Certified Bayesian Persuasion” and shows that this benchmark is equivalent in cryptographic power to secure two-party computation, demonstrating that hiding the signal from the sender is necessary.
Pablo D. Azar, Staff Report 1194, May 2026
Financial Shocks, Productivity, and Prices
Financial crises are frequently followed by persistent slowdowns in aggregate productivity growth. The authors study the interconnection between the productivity and pricing effects of financial shocks. They show that a tightening of credit conditions has a persistent, yet delayed, negative effect on firms’ long-run physical productivity growth while also inducing firms to change their pricing policies. Also, they demonstrate that the pricing adjustments themselves have productivity implications.
Simone Lenzu, David A. Rivers, Joris Tielens, and Shi Hu, Staff Report 1193, April 2026
Artificial Intelligence and Monetary Policy: A Framework and Perspective on Cyclical Transmission, Structural Transition, and Financial Stability
The author develops a framework analyzing how artificial intelligence (AI) reshapes monetary policy through three interrelated channels: cyclical transmission, structural transition, and financial stability. Given that central bank mandates center on price stability and financial stability, these developments place AI squarely within the domain of central banking. The author argues that AI does not call for a redefinition of central banks’ objectives, but it does require a recalibration of existing frameworks.
Simone Lenzu, Staff Report 1192, April 2026
Estimating Demand Shocks from Foot Traffic: A Big-Data Approach
Demand shocks in the service, retail trade, and health sectors are challenging to measure because output only occurs when a customer arrives at an establishment. The authors leverage high-frequency foot-traffic data to estimate demand shocks across New York City’s retail, service, and health sectors. Their analysis shows that demand dynamics in these customer-facing industries are fundamentally heterogeneous: establishments differ systematically in the persistence, volatility, and growth patterns of their demand processes.
Marina Azzimonti, David Wiczer, and Yang Xuan, Staff Report 1191, April 2026
Structural Changes in Investment and the Waning Power of Monetary Policy
Growing evidence suggests that monetary policy shocks have smaller effects on economic activity now than in the past, even putting aside issues of an effective lower bound on interest rates. The authors propose a partial explanation: secular change in both the production and composition of investment goods has weakened private investment’s role in the transmission of monetary policy to labor earnings and consumption. They demonstrate how these results may have important implications for optimal monetary policy.
Justin Bloesch and Jacob P. Weber, Staff Report 1190, March 2026
Repo and the Liquidity Risk Premium
Intermediating funds in the U.S. short-term money markets involves risk, which can be mitigated by holding buffers of liquid securities. The cost of holding these buffers, the liquidity risk premium, is driven by the opportunity cost of holding money and therefore is influenced by monetary policy. The authors use detailed data on the pricing of repurchase agreements (repo) to measure how changes in monetary policy affect the liquidity risk premium embedded in repo pricing.
Adam Copeland and Owen Engbretson, Staff Report 1189, March 2026


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