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Economy in Brief

U.S. Flow of Funds Show Modest Reduction in Q1 Credit Market Borrowing

by Carol Stone  June 6, 2013

Federal Reserve flow-of-funds data for Q1 show the net volume of credit market borrowing at a $2.4 trillion annual rate, very similar to Q4's $2.5 trillion; the earlier figure is revised somewhat from $2.3 trillion reported before. Q1's credit demand amounted to 14.9% of GDP, down from 15.9% in Q4. The Q1 reduction still left the ratio to GDP well above any other period since 2008. However, all major nonfinancial sectors borrowed at least somewhat less than in Q4.

Households, in fact, liquidated debt once again in Q1, at a -$77 billion annual rate, after borrowing at a relatively large $280 billion rate in Q4. They had net paydowns of home mortgages and somewhat less consumer credit borrowing; loans from depository institutions were also paid down following a bulge in Q4.

Nonfinancial corporations reduced their borrowing in Q1 to a $665 billion annual rate from $1.019 trillion in Q4. Corporate bonds were still the main tool, as long-term interest rates remain low (readily apparent in the graph nearby), although the amount was "just" $570 billion, down from $782 billion in Q4; most other types of corporate borrowing, such as bank loans and commercial paper, were also less than in Q4.

The federal government raised $1.198 trillion at an annual rate from credit markets in Q1, down from $1.259 trillion in Q4. In part the reduction in public borrowing was due to an increase in debt holdings by the government's pension funds, such as civil service and military retirement. The Treasury's public debt was acquired by two notable funding sources: the Federal Reserve bought a net of $575 billion and "rest of the world" investors $654 billion. These amounts are both sizable increases from most recent quarters, although far from record amounts.

The Flow of Funds data are in Haver's FFUNDS database. This latest release includes some restructuring of the tables in the data presentation and also highlights more on the Integrated Macroeconomic Accounts, which are produced jointly with the Bureau of Economic Analysis. Haver carries those tables in its USNA database.

Flow of Funds (SAAR, Bil.$) Q1'13 Q4'12 2012 2011 2010 2009 2008 2007
Total Credit Market Borrowing* 2392 2246 1523 952 616 -539 2592 4538
Federal Government 1198 1259 1140 1068 1580 1444 1239 237
Households -78 312 20 -202 -342 -229 -25 853
Nonfinancial Corporate Business 664 902 647 525 195 -150 370 855
Financial Sectors 89 -510 -394 -435 -932 -1809 897 1814
*Includes noncorporate business, state & local governments and the rest-of-the-world sector, not shown separately.
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