OFR Reports To Congress On Current Risks To U.S. Financial Stability

In its 2019 Annual Report to Congress, the Treasury Department's Office of Financial Research ("OFR") concluded that risk remains moderate to U.S. financial stability.

In particular, the OFR reported that while the U.S. economy has indicated strong performance in the past year, market risk is elevated, but remains in a moderate range. According to the OFR, valuations for several significant asset types (e.g., stocks, corporate debt and varying types of real estate) are "above historic levels." The OFR noted that risk is moderate for (i) macroeconomic risk, (ii) credit risk, (iii) liquidity and funding risk, and (iv) contagion risk. The OFR also noted that while non-financial corporate credit risk is rising, household credit risk has been reduced.