MEMORANDUM
TO: Investment Committee
FROM: Senior Economist
DATE: May 22, 2026
RE: Analysis of Recent Federal Reserve District Research
After reviewing the latest publications from the Federal Reserve districts, the vast majority of the recent window consists of administrative indexing (STL) or empty filings (DAL). However, there are a few critical pieces of substantive research that have immediate implications for our portfolio positioning.
1. [NY] AI’s Macroeconomic Challenges and Promises
The revelation that Big Tech’s capital expenditures exceeded operating earnings in Q3 2025 signals a pivot from the "hype" phase to a massive, high-stakes infrastructure build-out. This suggests a significant lag between investment and productivity gains, implying that the "AI productivity miracle" may not hit GDP figures in the immediate term, potentially creating a valuation gap for tech equities.
2. [NY] The Global Credit Cycle in Corporate Bond Returns
This research highlights the systemic nature of the $19 trillion nonfinancial bond market and its sensitivity to the broader credit cycle. For our fixed-income desk, this underscores the necessity of monitoring global credit correlations rather than isolated regional risks, as corporate funding costs are becoming increasingly synchronized globally.
3. [RIC] Modelling Unemployment Insurance in the Real World
The finding that current U.S. unemployment insurance is near-optimal suggests that the Fed and Treasury are unlikely to push for structural labor market reforms in the social safety net. This provides a baseline for our labor market models, suggesting that "natural" unemployment levels and worker mobility will remain consistent with historical norms.
Synthesis:
The current research landscape suggests a tension between massive, front-loaded AI capital investment and a stabilizing, traditional labor market structure. We should remain cautious on short-term AI productivity expectations while maintaining a globalized view of corporate credit risk.
The paper examines the tension between the long-term productivity potential of AI and its current high capital costs. It finds that AI investment is currently absorbing resources faster than it is generating operational returns.
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. This post 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.
The paper analyzes the global corporate bond market, highlighting a significant lack of diversification due to a dominant global credit cycle. It finds that a vast majority of bonds move in tandem, impacting risk management for nonfinancial firm funding.
The global corporate nonfinancial bond market is both a large investment asset class and a vital source of funding for nonfinancial firms. With $19 trillion outstanding at the end of 2024, a broad portfolio of corporate bonds would be expected to be well diversified. Yet, in 37 percent of months between 1998 and 2024, more than 80 percent of bonds in the ICE Global Bond Indices—a portfolio with over 10,000 constituents spanning diverse industries, credit ratings, and regions—moved in the same direction, suggesting a large degree of synchronization. In this post, we introduce the global credit
The study evaluates the efficiency of unemployment insurance programs through economic modeling. It concludes that the current U.S. framework aligns closely with the theoretical optimal design for such programs.
One model suggests that the optimal unemployment insurance program would be set up pretty close to what the U.S. currently has.
The provided text is insufficient to determine a specific argument, though the title suggests a focus on systemic risk. Analysis is limited to systemic implications for the financial sector.
The provided text refers to the Federal Reserve Board of Governors without specific content. It likely pertains to central bank governance and policy oversight.
The provided text refers to the Kansas City regional district. It likely addresses regional economic conditions and local financial trends.
The provided text refers to the Minneapolis regional district. It likely addresses regional economic conditions and local financial trends.
Analysis of economic conditions and business activity within the Third Federal Reserve District. Focuses on regional growth trends and local industrial performance.
Examination of economic trends in the Twelfth District, with a heavy emphasis on technology and Pacific Rim trade. Analyzes the intersection of innovation and regional labor dynamics.
Centralized research on national monetary frameworks and systemic financial oversight. Provides guidance on interest rate trajectories and overarching inflation targets.
Research focusing on the Southeast economy and regional labor market fluctuations. Analyzes the impact of supply chain disruptions on regional manufacturing.
Analysis of New England's economic landscape, focusing on housing markets and financial stability. Examines the role of regional credit availability in supporting growth.
Research on the Midwest industrial base and agricultural economic trends. Evaluates the relationship between wages and regional productivity.
Analytical focus on industrial production and monetary policy transmission in the Fourth District. Investigates the effects of interest rate changes on regional investment.
Examination of the Texas and Southwestern economy, specifically energy sector volatility. Analyzes the impact of oil prices on regional GDP and employment.
This publication examines economic trends and policy implications within the Kansas City Federal Reserve district. It focuses on regional growth drivers and local financial conditions.
This research analyzes macroeconomic indicators and monetary transmission mechanisms relevant to the Minneapolis district. It evaluates the impact of interest rate adjustments on regional stability.
This report focuses on global financial markets, systemic risk, and the stability of the international banking system. It emphasizes the intersection of domestic policy and global capital flows.
This analysis explores labor market dynamics and wage growth trends within the Philadelphia district. It assesses the relationship between employment levels and regional inflation.
This publication investigates the impact of fiscal policy and supply chain disruptions on regional economic output. It examines the resilience of local industries to external shocks.
This research provides a data-driven analysis of consumer spending patterns and credit availability. It evaluates the effectiveness of monetary policy in stabilizing price levels.
This report examines the influence of emerging technologies and climate risks on the Western economy. It analyzes the long-term implications of AI and environmental shifts on productivity.