The University of California's Investments Committee meeting on May 11, 2025, spotlighted significant economic concerns, particularly regarding the potential for rising unemployment and its implications for Federal Reserve interest rate cuts. A key discussion point was the market's misjudgment over the past two years, with experts predicting that if unemployment rises from its current rate of around 4.1% to 5% or 6%, the Fed would likely respond with rate cuts, regardless of inflation trends.

The committee highlighted a notable increase in jobless claims, which have risen from a range of 200,000 to 215,000 to 241,000 recently, indicating a shift in the labor market. This uptick in claims, alongside a decrease in job openings, suggests a cooling job market that could lead to further economic adjustments.

In terms of investment strategy, the committee emphasized a long-term focus on equities, particularly in the U.S. market, which represents a significant portion of global equities. The discussion underscored the importance of remaining invested in equities, especially for younger investors, as the era of high bond returns appears to be over. The committee noted that the U.S. economy's innovative capacity, particularly in technology and artificial intelligence, remains a strong driver for future growth.

As the meeting concluded, the committee acknowledged the retirement of Dave Schroeder, a senior portfolio manager with over two decades of service, recognizing his contributions to the UC Investments team. The discussions set the stage for a critical period ahead, with the next six weeks leading up to the fiscal year-end expected to be pivotal in determining the economic landscape.