Fed Says We’re All Richer Now… Do You Feel It?

But the de-leveraging has not been seen unanimously as U.S. non-financial debt rose at a 4.9% annual rate after a rise of 4.1% in Q1 based on government borrowing.  But the private debt contracted as household debt decreased at a 1.7% annualized rate while government debt expanded (by 28.2%, the fourth consecutive double-digit increase).  Home mortgage debt slid 1.4% and consumer credit dropped at a rate of 6.5%.

Also noted was that U.S. household net worth in the second quarter climbed to about 4.87 times disposable personal income, versus 4.75-times in Q1.

Non-Financial business borrowing fell by 1.8% in Q1, much more than the 0.2% drop in Q1.  That figure was the biggest decline in about 15 years.  Outstanding total borrowings of non-financial debt  was $34.35 trillion in Q2, up from $33.94 trillion in Q1.

There is an interesting note here though regarding a financing gap of the amount in which companies need to raise outside capital to finance cap-ex and operations.  This went to negative $155.8 billion in Q2 from a negative $43.9 billion figure in Q1.

California’s and Michigan’s woes are not the only woes out there in muni-land… The report shows that state and local government debt came in sharply higher by 8.3% in Q2, and that is after seeing a gain of 4.9% in Q1.

If you want to know how these figures compare to 2008 levels, the Commerce Department listed the U.S. 2008 Gross Domestic Product at $14.26 Trillion, while personal consumption expenditures was just over $10 billion.

As far as how this compares to the size of America’s top 25 public corporations, you can always look at our new 24/7 Wall St. Real-Time 500 Largest List that shows the real-time value of the 500 largest stocks in America by market cap.  The top 25 companies on that list have a combined value today over $3.65 trillion.

This is a very long report but can be found here at the Federal Reserve site.

Jon C. Ogg
September 17, 2009