Argus

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Mar 23, 2026

Summary

A group of indicators from Federal Reserve banks and the Department of the Treasury show that the U.S. financial system is still functioning normally despite the war in Iran. We monitor the indices of "Financial Conditions" for signs of stress, as markets that are functioning normally may be the bulwark between an economic slowdown and a financial crisis. In his textbook "Macroeconomics," Harvard professor N. Gregory Mankiw, who was chairman of George W. Bush's Council of Economic Advisors, defines a financial crisis as "a major disruption in the financial system that impedes the economy's ability to intermediate between those who want to save and those who want to borrow and invest." Mankiw also offers the following. "Throughout history, many of the deepest recessions have followed problems in the financial system." Our dashboard of financial conditions indices includes the St. Louis Fed Financial Stress Index (FSI), the Chicago Fed National Financial Conditions Index, the Chicago Fed National Financial Conditions Risk Subindex, and the OFR Financial Stress Index (or FSI, which was developed by the Office of Financial Research, within the Department of the Treasury). These indices use statistical techniques to monitor a wide range of variables that are indicative of changing financial conditions. The FSI, for example, includes 18 weekly data series: seven interest rate series, six yield spreads, and five other indicators. The indices in our dashboard are designed so a value of zero represents

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