Risk to global trade is considered a “salient risk” to the financial system and the broader global economy by nearly three in four respondents to a Federal Reserve survey on financial stability, the agency said late Friday.
The 73% of those tagging “risks to global change” as a salient risk is up considerably from just last fall, when only one-third (33%) of Federal Reserve contacts surveyed gave it the same risk level.
The Fed said it culled the results cited in its April 2025 Financial Stability Report from outreach to researchers, academics, and market contacts conducted from February to early April. However, the Fed said, the “vast majority” of survey responses were received before April 2 – the day President Donald Trump (R ) announced steep new tariffs on goods from hundreds of countries.
The report itself was written April 11, according to to the Fed.
The most frequently cited topics in the responses, the Fed said, were risks to global trade, policy uncertainty (50%, up from 46% last fall) and U.S. fiscal debt sustainability (50%, down from 54%).
Other salient risks cited by respondents were persistent inflation (41%, up from 33%) and corrections in asset markets (36%, up from 29%).
Despite the views of respondents to the short-term risks, the Fed report indicates that financial stability, at least for now, is not wavering.
The Fed outlines four areas it uses for gauging financial system vulnerabilities that may affect financial stability: Asset valuations, borrowing by businesses and households, leverage in the financial sector and funding risks.
More specifically, the Fed report states in each area:
- Asset valuations: “Despite declines in asset prices amid significant market volatility, valuations remain high across a range of markets including equities and residential real estate.”
- Business, household borrowing: “The ability of businesses to service their debt generally improved even as leverage remained elevated. Household debt was at modest levels relative to gross domestic product and mostly owed by borrowers with strong credit histories. Auto and credit card loan delinquencies remained above pre-pandemic levels.”
- Financial sector leverage: “The banking system remained sound and resilient, with regulatory capital ratios approaching or exceeding historical highs. Fair value losses on fixed-rate assets were still sizable for some banks and continued to be sensitive to fluctuations in interest rates.”
- Funding risks: “Funding markets were resilient through early April’s market volatility. Most domestic banks maintained high levels of liquid assets and stable funding, and their reliance on uninsured deposits remained well below the elevated levels seen in 2022 and early 2023. Nontraditional liabilities at life insurers are at the upper end of their historical distribution.”
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