For the first time in more than two years, state and local government debt also rose, by 0.8% in the second quarter. Federal debt rose by 10.9% in the quarter, the smallest increase since the second quarter of last year.
Total borrowing by U.S. households rose by $157.3 billion in the second quarter, only the second of the last 17 quarters to show an increase. Total U.S. household debt is just a shade under $13 trillion.
Consumer credit rose by 6.2% as student and auto loans once again jumped. And the falling value of equities reduced net worth by $322 billion. The recent rise in the equities markets have likely turned that figure around since the end of the second quarter. Real estate values rose by $355 billion in the second quarter, leading to a total household net worth of $62.7 trillion.
The added borrowing in the second quarter could be either a sign that Americans are more confident about their future prospects or a sign that household cash is in short supply. The Fed doesn’t answer that question.
The flow of funds report is available here.
Paul Ausick
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