Federal Reserve Flags Growing Risks to U.S. Economy in New Stability Report

The Federal Reserve’s newest Financial Stability Report paints a more anxious picture of the U.S. economy, highlighting rising global trade tensions, growing policy uncertainty, and worries over the nation’s debt levels as key threats to financial stability.

This marks the Fed’s first major risk assessment since Donald Trump’s return to the presidency, and the tone has clearly shifted.

According to the survey, 73% of market participants now rank global trade disputes as their top concern — more than double the number from last November’s report.

Policy unpredictability also emerged as a major fear, with half of respondents worried about shifting economic strategies under the new administration, signaling a sharp rise in anxiety compared to last year.

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Concerns aren’t limited to trade and governance. The Fed noted a spike in worries about U.S. Treasury market volatility, with 27% of participants citing it as a serious issue, up from 17% previously.

Analysts point to tightening liquidity and evolving investor behavior as reasons behind the growing unease in a market typically seen as a global safe haven.

Another red flag raised by the report is the risk of foreign investors pulling back from U.S. assets.

A large-scale retreat could hit the value of the dollar, push up interest rates, and send shockwaves through global financial markets — adding yet another layer of uncertainty to an already fragile environment.

Alexander Stefanov