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Economy in Brief

U.S. Financial Accounts Show Expanded Borrowing in Q4
by Carol Stone, CBE  March 11, 2022

• Federal government resumes sizable borrowing in Q4 after net paydown in Q3.

• Household borrowing largest relative to income since before the Great Recession.

• Business corporations take on new loans and pay down bonds in Q4.

Borrowing in the U.S. economy totaled $6.854 trillion, seasonally adjusted annual rate, in the fourth quarter of 2021, up from $3.246 trillion in Q3. The Q4 amount is 28.5% of GDP, up from 14.0% in Q3. For all of 2021, borrowing was $5.389 trillion, notably less than the outsized amount of $7.76 trillion in 2020.

Among nonfinancial sectors of the U.S. economy, perhaps most notable was the shift by the federal government; it had paid down $327 billion in debt in Q3. So in Q4, it returned to net borrowing, amounting to $2.663 trillion. During all of 2021 (the calendar year, not a government fiscal year), the federal government borrowed $1.693 trillion, down from $4.581 trillion in recession-ridden 2020, which included the record-large $12.320 trillion in Q2 of that year.

Households borrowing totaled $1.403 trillion in Q4, equal to 7.7% of disposable personal income; this was larger than Q3’s amount, $1.067 trillion, equal to 5.9% of disposable personal income. Q4’s amount is the largest share of disposable income since before the 2008-09 Great Recession, but that pre-recession period, the share was roundly 15%, that is, far larger than these recent periods. The recent borrowing still emphasized 1-4 family home mortgages, as it has since the middle of 2020, even as – and perhaps especially because – mortgage interest rates have started to rise from their record lows at the very beginning of 2021. In Q4 2021, the amount of mortgage borrowing was $921 billion, up from $895 billion in Q3. Consumer credit expanded $302 billion in Q4, up from $207 billion Q3. Again, all of these data are seasonally adjusted annual rates. The Q4 amount of consumer credit borrowing is 1.7% of disposable income, up from 1.1% in Q3. In the five years ending in 2019, that is, before the pandemic, this measure averaged 1.4%.

Nonfinancial corporate businesses' overall borrowing was almost the same amount in Q4, $770 billion, as it had been in Q3, $747 billion. However, the mix was quite different: loans were up $867 billion in Q4 following $400 billion in Q3, while corporate bonds were paid down by $155 billion after net issuance of $275 billion in Q3. The Q4 borrowing equals 28.8% of capital expenditures, down modestly from 30.9% in Q3.

Domestic financial institutions borrowed $1.092 trillion in Q4, up from $668 billion in Q3 and similar to the $1.119 trillion in Q2.

Foreign borrowers, both private and governmental institutions, borrowed $509 billion in Q4, down from $926 billion in Q3.

Net wealth in the U.S, economy rose $5.889 trillion in Q4, up from $2.339 trillion during Q3 (quarterly amounts, not seasonally adjusted or annualized). Household net worth increased $5.297 trillion in Q4, basically double the $2.685 trillion in Q3.

The Financial Accounts data are in Haver's FFUNDS database. Associated information is compiled in the Integrated Macroeconomic Accounts produced jointly with the Bureau of Economic Analysis (BEA); these are carried in Haver's USNA database as well as in FFUNDS.

Financial Accounts (SAAR, Bil.$) Q4'20 Q3'21 Q2'21 Q1'21 2021 2020 2019
Total Borrowing* 6,854 3,246 5,288 6,170 5,389 7,760 2,979
    % of GDP 28.5 14.0 23.3 28.0 23.4 37.1 13.9
Federal Government 2,663 -327 2,315 2,122 1,693 4,581 1,175
Households 1,403 1,067 1,314 1,121 1,226 615 513
Nonfinancial Corporate Business 770 747 182 561 565 928 479
Financial Sectors 1,092 668 1,119 1,140 1,005 957 332
Foreign Sector 509 926 108 864 602 70 207

*Previously called "credit market borrowing" and includes debt securities plus loans. The total here includes borrowing by noncorporate business and state & local governments, not shown separately.

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