Fed says US Q2 non-financial debt rose at fastest rate since Q4 1989
The level of borrowing across the economy, excluding the financial sector, rose at its fastest rate in over 12 years in the second quarter, the Federal Reserve said.
Domestic non-financial debt rose at a seasonally adjusted annual rate of 7.8% in the second quarter, to 19.993 trln usd, after rising 4.8% in the first quarter, the Fed said in its quarterly Flow of Funds report.
This is the biggest increase in non-financial debt since the fourth quarter of 1989. Non-financial debt excludes borrowing by banks and other financial services firms.
"Much of the increase reflected a surge in federal government borrowing," the Fed said, as federal debt rose 13.3% to 3.502 trln usd. This was up from a 1.2% increase in the first quarter, and marks the fastest rate since Q3 1991.
The return of federal budget deficits this year has generated the increase in borrowing, after the government debt load fell from 1998-2001.
Excluding the federal government, non-financial debt rose 6.7% to 16.491 trln usd, up from a 5.6% increase in the first quarter.
Looking just at the business sector, borrowing increased 2.9% to 7.017 trln usd in the second quarter. This is faster than the 1.9% increase in the first quarter, but still "well below" borrowing growth rates of recent years, the Fed said.
The increase in business borrowing came from a pickup in mortgages for commercial property and a smaller contraction in the commercial paper market, the Fed said. The rise came despite a steep decline in bank loans to businesses.
Bank loans contracted by $145.1 billion last quarter, more than the 34.7 billion decline in the first quarter.
Commercial paper debt outstanding fell $93.0 billion in the second quarter, less than the 155.7 billion drop in the first quarter.
Countering these declines, commercial mortgage borrowing rose $199.4 billion, up from a 121.0 billion gain in the first quarter.
Non-financial businesses also raised equity during the second quarter, issuing a net $62.5 billion. In the first quarter, share retirements helped lead to a net $3.7 billion contraction in equity issuance.
Corporate bond issuance rose by $207.0 billion in the second quarter, down from 233.8 billion the previous quarter. |
