Haver Analytics
Haver Analytics
| Jun 08 2023

Borrowing Up Modestly as % of GDP in Q1

  • Federal government borrowing largest among nonfinancial sectors, but up just modestly in Q1.
  • Business borrowing ratio to GDP increases.
  • Households borrow smallest ratio to disposable income since 2020 pandemic.

Borrowing in the U.S. economy increased moderately in Q1 2023, to $4.831 trillion from $3.979 trillion in Q4 2022, quoted at seasonally adjusted annual rates. The data come from the Federal Reserve’s Financial Accounts, and the totals here include all sectors of the economy, domestic private, government and foreign. All the amounts described here, unless otherwise noted, are quoted at seasonally adjusted annual rates (“SAAR”), although the raw amounts are available in the Fed’s accounts. We cite the SAAR data to show how they compare with the economy as a whole. Thus, the Q1 SAAR total represented 18.2% of GDP, up from 15.2% in Q4; for all of 2022, borrowing amounted to 22.7% of GDP.

Among nonfinancial sectors, the federal government was largest borrower, taking on $1.195 trillion in Q1, up from $1.057 trillion in Q4 and representing 4.5% of GDP in Q1. Businesses borrowed at a $755 billion annual rate in Q1, with $604 billion for nonfinancial corporations and $151 billion for noncorporate businesses. The business total represents 2.8% of GDP, up from 2.5% in Q4 2022 and with business borrowing stronger in the first half of last year, it is 4.2% of GDP for all of 2022.

Households borrowed just $420 billion in Q1, down from $629 billion in Q4 and $1.153 trillion for all of 2022. The Q1 amount was 2.1% of disposable income, down from 3.3% in Q4 and the smallest ratio since the pandemic recession in 2020. In Q1, both mortgages and consumer credit use slowed with one-to-four family home mortgages up just $306 billion, compared to $455 billion in Q4 and, with amounts in excess of $1 trillion in the first half of last year, $838 billion for all of 2022. Consumer credit use was just $204 billion in Q1, down from $349 billion in Q4 and compared with $355 billion for 2022 as a whole.

Borrowing by financial institutions themselves was stronger in Q1, at $2.44 trillion, up from $2.029 trillion in Q4 and $1.771 trillion for all of 2022. This borrowing included $1.635 trillion in debt securities in Q1, up slightly from $1.63 trillion in Q4, plus loans of $805 billion in Q1, up from $399 billion in Q4.

Foreign borrowers paid down debt again in Q1, though just $19 billion, after paying down $234 billion in Q4 and adding $282 billion on net during all of 2022.

Net wealth in the U.S. economy increased $1.467 trillion in Q1, following an advance of $1.349 trillion in Q4. The increase for all of 2022 was $699 billion, due to sizable reductions in Q2 and Q3. These amounts are the actual totals, not seasonally adjusted or annualized. So the total net wealth at the end of Q1 was $13.7 trillion, which is slightly lower than the record of $13.9 trillion at the end of Q1 2022. Household net worth rose $3.025 trillion in Q1, following a $1.619 trillion increase in Q4 But for all of 2022, household net worth fell $4.6 trillion.

The Financial Accounts data are in Haver's FFUNDS database. The Federal Reserve is the main source, while 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. Note that revisions are common throughout the accounts with every quarterly release.

  • Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo.   At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm.   During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.

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