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Economy in Brief

US Flow of Funds: Debt Growth Off Considerably
by Tom Moeller December 8, 2006

Credit market debt outstanding owed by all sectors of the economy grew 7.3% (AR, 8.8% y/y) during the third quarter, the slowest quarterly growth rate since early last year.

The slowdown reflected the federal government's debt which grew just 3.7% during 3Q and that slowed the y/y gain to 5.2%, half the growth rate of 2003. A 7.9% (10.6% y/y) rise in households' home mortgage liabilities also was the slowest since early 2001 and nearly half the rate of gain of just a year ago.

To the upside, consumer credit growth quickened to 10.2% (4.3% y/y), but households' obligations in the form of bank loans surged for the fourth straight quarter (58.1%, 134.6% y/y).

The net worth of the US household sector jumped 1.5% in 3Q versus 2Q'06 to a record $54.064 trillion.

On the asset side of the ledger, total assets of households and nonprofit organizations rose at a 6.6% rate (7.4 y/y). Households' ownership of real estate rose at just a 3.9% rate (8.3% y/y), the slowest rate of gain in ten years. Mutual fund share holdings rose at a 12.2% rate (16.1% y/y) and the value of corporate equities held directly by households rose 3.5% (-2.7% y/y). The value of money market shares rose at a 20.6% rate with higher interest rates (17.2% y/y) but Treasury security holdings fell for the second consecutive quarter (+15.6% y/y).

Flow of Funds (Y/Y Chg.) % of Total 3Q'06 2Q'06 2005 2004 2003
Total Credit Market Debt Outstanding 8.8% 9.0% 8.9% 8.9% 9.1%
    Federal Government 12% 5.2% 5.9% 7.0% 9.0% 10.9%
    Households 27% 9.7% 11.1% 11.7% 11.7% 11.7%
    Nonfinancial Corporate Business 14% 7.3% 7.1% 5.5% 3.7% 2.3%
  Financial Sectors 32% 9.6% 9.2% 8.2% 8.1% 9.9%
Net Worth: Households & Nonprofit Organizations (Trillions) $54.064 $53.288 $51.762 $47.962 $43.968
  Tangible Assets: Households $26.542 $26.245 $25.173 $22.524 $20.239
   Financial Assets: Households $40.516 $39.768 $38.802 $36.444 $33.541
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