Debt Levels Manageable for Now But Fed Keeping a Close Eye on Risks
-
Household, business, and bank debt seem manageable and not a major threat currently.
-
Household debt is mostly held by those with good credit or home equity. Business debt is high but companies have profits to pay it off.
-
Banks are sound overall, with ample cushions above requirements. Deposit volatility has calmed down.
-
Leverage is elevated among some private hedge funds serving retail investors. Commercial real estate lending carries some risk.
-
Fed remains vigilant about emerging risks, like the surprise Silicon Valley Bank failure, since the system is complex.