Office of Finance reports relative to the Investment Reports for the months ending January 31, 2025 through June 30, 2025; August 31, 2025; and, December 31, 2025.

This item presents the City of Los Angeles's Investment Reports from the Office of Finance for several months in 2025, detailing the economic environment, interest rates, and the performance of the City's General Pool.

Economic Environment & Interest Rates:

• Early 2025 (Jan-Mar): The U.S. economy (GDP) showed a 2.3% annualized increase in Q4 2024. Unemployment was stable around 4.0-4.2%, and CPI inflation was around 2.4-3.0%. The Federal Reserve maintained the Fed Funds rate at 4.25%-4.50%.
• Mid-2025 (Apr-Aug): GDP saw a slight decrease in Q1 2025 (-0.3% to -0.5% annualized), then rebounded to +3.3% in Q2 2025. Unemployment edged up to 4.3% by August. The Fed Funds rate remained unchanged.
• Late 2025 (Dec): GDP growth accelerated to +4.4% in Q3 2025, with the 2025 full-year forecast at 2.2%. The unemployment rate was 4.4%, and the CPI increased 2.7%. The Federal Reserve cut the Fed Funds rate to 3.50%-3.75% in December 2025.

General Pool Performance:

• The City's General Pool maintained an AA+ average credit rating throughout the year.
• Market Value: The total market value of the General Pool fluctuated, starting at $14.66 billion in January, reaching a low of $14.41 billion in March, and ending the year at $16.65 billion in December 2025.
• Book Yield: The General Pool's effective book yield remained relatively stable, ranging from 3.25% (Jan) to 3.41% (June), and ending at 3.29% (Dec), consistently underperforming its benchmark by 0.69% to 0.93%.
• Total Return: Monthly total returns varied, with a notable dip to -0.22% in May, but generally showed positive performance, typically outperforming its benchmark by a small margin (e.g., +0.01% to +0.02%).

Securities Lending:

• Fiscal Year-to-Date (FYTD) securities lending income reached $260,000 by June 2025 and $215,000 by December 2025 (after the new fiscal year started in July). The amount of securities on loan ranged from $204 million (April) to $595 million (December).