Fed survey respondents cite risk to the economy if AI valuations suffer large losses

Financial Stability Concerns - Asset values remain elevated relative to historical norms [1] - Commercial real estate values show signs of stabilization, but refinancing concerns exist in coming years [1] - Leverage of publicly traded firms remains high, but debt service ability is robust [2] - Hedge fund and life insurance leverage also remains high [2] - Auto and credit card delinquencies remain above average [3] Banking Sector - Banks are maintaining a high level of liquid assets [2] - Robust bank lending to special purpose entities and private credit is noted [3] Emerging Risks - Algorithmic trading driven by AI raises concerns about potential market manipulation [3] - Survey respondents cite risk to the economy if AI valuations suffer large losses [3] Recent Events - Bankruptcies of First Brands were isolated events [3]