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Economy in Brief

U.S. Household Net Worth Down Again
by Tom Moeller June 5, 2008

The net worth of the U.S. household sector deteriorated during 1Q to $55.97 trillion, down from the 3Q '07 record level of $58.196B. Net worth last quarter also fell 1.0% from a year earlier value of $56.532B

Household sector assets fell $1.6 trillion (-2.2%, +0.4% y/y) due to a $255.8 billion decline (-1.0%, +0.4% y/y) in tangible asset values. Real estate asset values fell 1.4% (-0.4% y/y). Financial asset values fell a harder 2.9% (+0.5% y/y) with the lower stock market. Total liabilities grew 0.7% (6.4% y/y).

Credit market debt outstanding owed by all sectors of the economy grew 8.5% AR (9.0 % y/y) during the first quarter of 2008 as the government's larger budget deficit boosted government debt obligations by 5.7% y/y. Still, the y/y rise was about half the peak 10.9% rise during 2003.

Household sector credit debt growth slowed to a 3.0% quarterly rate (6.4% y/y) with the slower economy. That was half the growth during 2004. As home purchases dropped, households' obligations on mortgages grew just 2.7% (5.5% y/y) and that was the lowest quarterly gain since early 1993. Consumer credit dropped at a 2.1% rate (+6.0% y/y) while bank loans surged to another high.

Credit market debt owed by the nonfinancial corporate business sector grew at a quarterly rate of 8.3% (10.8% y/y) which was near the strongest gain in ten years. The non-corporate business sector's debt owed also sped up (13.2% y/y).

Credit market debt growth owed by the financial sector decelerated to a 4.6% rate (10.2% y/y).

Banking Globalization, Monetary Transmission, and the Lending Channel is a paper recently presented by authors from the Federal Reserve Bank of New York. It is available here.

Flow of Funds (Y/Y % Chg.) % of Total 1Q '08 4Q'07 2007 2006 2005
Total Credit Market Debt Outstanding -- 8.5 9.0 9.0 9.4 8.9
    Federal Government 11% 5.7 4.9 4.9 3.9 7.0
    Households 28% 5.9 6.8 6.8 10.2 11.1
    Nonfinancial Corporate Business 13% 10.8 11.1 11.1 8.2 4.8
    Nonfarm, NonCorporate Business 7% 13.2 13.4 13.4 12.6 13.6
  Financial Sectors 32% 10.2 11.2 11.2 10.0 8.5
             
Net Worth: Households & Nonprofit Organizations (Trillions) -- $55.970 $57.666 $57.666 $55.677 $51.716
  Tangible Assets: Households -- $26.395 $26.650 $26.650 $25.964 $24.385
   Financial Assets: Households -- $44.071 $45.405 $45.405 $43.175 $39.528
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