Federal Reserve Board releases hypothetical scenarios for its 2022 bank stress tests
'In the 2022 stress test scenario, the U.S. unemployment rate rises 5 3/4 percentage points to a peak of 10 percent over two years. The large increase in the unemployment rate is accompanied by a 40 percent decline in commercial real estate prices, widening corporate bond spreads, and a collapse in asset prices, including increased market volatility."
[{"id": "hwg34zp", "text": "Can we get a link?", "replies": [{"id": "hwg3oo6", "text": "[Federal Reserve Board releases hypothetical scenarios for its 2022 bank stress tests](https://www.federalreserve.gov/newsevents/pressreleases/bcreg20220210a.htm)", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwgi884", "text": "This is great, I was thinking of proposing something similar for my company just this week. I think is great that we can use these scenarios for our own testing.", "replies": [], "depth": 1}, {"id": "hwi72kg", "text": "They have been saying this for about 10 ish years.  It isn't hitting yet, and I wonder if there is something that we are missing.", "replies": [], "depth": 1}, {"id": "hwjp9je", "text": "This isn\u2019t a prediction though, it\u2019s a hypothetical scenario used to facilitate a stress test. That\u2019s how I understand it anyway.", "replies": [{"id": "hwkb6zs", "text": "You are correct. It\u2019s their not their worst case scenario, but it\u2019s close.\n\nEdit: But wider stress test parameters tells you a little about their general outlook for the next couple years..", "replies": [{"id": "hwkrusq", "text": "That\u2019s the thing, I don\u2019t think it\u2019s at all a reflection of their outlook. I think it\u2019s just a worst case scenario used to ensure the system can handle a black swan event. Like a ship doing a drill to abandon ship. Just because they practice for it doesn\u2019t mean it\u2019s expected or at all likely.", "replies": [{"id": "hwksawd", "text": "Correct, but these are wider parameters than the last \u201cworst case\u201d scenario stress tests. If you think of it as a spectrum with this is where we are now, this is where best case is, and this is where worst case is, and the whole scale is sliding so that the worst case gets worse and the best case gets worse, it gives an indication of regulator sentiment.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]