Borrowing in the U.S. Slowed in Q2
Summary
- Credit demand was 12.3% of GDP in Q2, down from 18.8% in Q1.
- Federal government borrowing surged in Q2, almost three times the Q1 amount.
- Household borrowing was higher in Q2 than Q1, but smaller than 2022.
Credit demand in the U.S. economy totaled $3.307 trillion in Q2 2023, measured at a seasonally adjusted annual rate. This was down from $4.975 trillion in Q1 and also down from the 2022 total of $5.691 trillion. The Q2 amount represented 12.3% of GDP, down from 18.8% in Q1 and noticeably less than the 22.4% of GDP in 2022 as a whole. These amounts of credit usage are cited as seasonally adjusted annual rates to facilitate the comparison to GDP, that is, the size of the overall economy, and the comparison of quarterly and annual data, but they are also available in their original, not seasonally adjusted quarterly amounts in the Federal Reserve’s Financial Accounts data and in Haver’s FFUNDS database.
As is frequently the case, the federal government was the largest borrowing sector in Q2, with $3.440 trillion, almost three times the Q1 amount of $1.195 trillion and more than twice as much as the 2022 total of $1.547 trillion. The Q2 amount is 12.8% of GDP, substantially more than the 4.5% in Q1 and also more than the 6.1% in all of 2022.
In Q2, U.S. households borrowed a total of $532 billion, SAAR, up modestly from the Q1 amount of $465 billion but down from $1.136 trillion for all of 2022. The Q2 amount represents 2.7% of disposable personal income, slightly more the than 2.4% in Q1 but also down markedly from the 6.1% average for all of 2022. In Q2, home mortgage borrowing was $359 billion, slightly larger than the $346 billion in Q1, although it was much less in both of those quarters than the total of $831 billion during 2022. Consumer credit increased at an annual rate of just $114 billion in Q2, down from $210 billion in Q1 and $345 billion in 2022 as a whole.
Nonfinancial corporate businesses borrowed at just a $266 billion annual rate in Q2, down from $633 billion in Q1 and $665 billion for all of 2022. The Q2 amount was just 1.0% of GDP, less than half the Q1 comparison of 2.4% and also smaller than the 2.6% for 2022 as a whole.
Foreign borrowers used just modest amounts of U.S. credit in Q1 and Q2, $35 billion and $178 billion, respectively; they had paid down some debt in Q4 2022, and their total for the year was net borrowing of $288 billion.
Financial institutions in the U.S. paid down $1.316 trillion in Q2 after borrowing at a $2.316 trillion annual rate in Q1 and $1.664 trillion during the year 2022.
Net wealth in the U.S economy increased $5.902 trillion during Q2, almost four times the $1.533 trillion increase in Q1. These data are quoted at actual, not seasonally adjusted amounts. On June 30 total net wealth was $142.7 trillion, a new record amount; the previous high was $138.5 trillion on March 31, 2022. Household net worth was $154.3 trillion on June 30, up from $148.8 trillion on March 31 and also a new high since the $152.5 trillion on March 31, 2022.
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
AuthorMore in Author Profile »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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