Credit Demand Had Moderate Growth in Q4
Summary
- Borrowing by sectors generally less in Q4.
- Even federal government borrowing was less, seasonally adjusted.
- Households borrowed just 2.3% of disposable income.
Borrowing in the U.S. economy totaled $3.946 trillion in Q4 2022 at a seasonally adjusted annual rate, down moderately from $4.964 trillion in Q3 and noticeably less than $8.317 in Q1 2022 and $7.136 trillion in Q4 2021, all according to the Federal Reserve’s “Financial Accounts” released today, March 9. For all of 2022, borrowing was $5.792 trillion. The Q4 borrowing represented 15.1% of GDP and for the whole year, it was 22.7%; that annual total is very similar to the 23.5% of GDP in 2021.
Borrowing by nonfinancial domestic sectors of the economy was down modestly in Q4, while financial institutions borrowed more and foreign borrowers paid down a bit of their debt to U.S. lenders. Among the domestic nonfinancial sectors, businesses borrowed $717 billion, saar, in Q4 versus $831 billion in Q3; corporations borrowed just $275 billion, down from $503 billion in Q3, while noncorporate businesses increased their Q4 borrowing somewhat to $443 billion from $327 billion in Q3.
Federal government borrowing was actually slightly smaller in Q4, $1.057 trillion saar, down from $1.101 trillion in Q3; for all of 2022, the federal government borrowed $1.547 trillion, down from $1.683 trillion in 2021. The 2022 amount represents 6.1% of GDP, down from 7.2% in 2021; in the pandemic year of 2020, federal government borrowing was 21.8% of GDP.
Households borrowed “just” $442 billion, saar, in Q4, down from $1.156 trillion in Q3; the Q4 amount represents 2.3% of disposable income, noticeably less than 6.2% in Q3 and 5.9% for all of 2022. Borrowing for home mortgages (for 1-4 family houses) was $543 billion in Q4, down from $811 billion Q3 and the smallest amount since Q4 2020; the Q4 2022 amount is still markedly larger, though, than any period since the beginning of the Great Recession of 2008-09. In Q4 2022, consumer credit borrowing was $327 billion, up from $308 billion in Q3; the Q4 amount was 1.8% of total personal consumption expenditures, very similar to the proportion of consumer spending people borrowed for several years before the pandemic.
Domestic financial institutions borrowed $1.935 trillion in Q4, up from $1.277 trillion in Q3 and consisting of $1.568 trillion in debt securities and $367 billion in loans. For all of 2022, their borrowings were $1.746 trillion, which included $1.367 trillion in debt securities and $379 billion in loans.
Foreign borrowers paid down $37 billion in debt in Q4 and borrowed a net of $348 billion for all of 2022. The 2022 amount was down from $665 billion in 2021, which was the all-time record annual amount.
Net wealth in the U.S. economy rose $2.541 trillion in Q4 following just a $124 billion increase in Q3 and a decline of $3.654 trillion in Q2; these numbers are actual amounts, not seasonally adjusted or annualized. For all of 2022, net wealth increased $1.143 trillion compared to $21.425 trillion in 2021. Household net worth increased $2.927 trillion in Q4, following a decreased of $2.924 trillion in Q3 and a larger drop of $5.843 trillion in Q2. For all of 2022, households saw their net worth decline $4.112 trillion or 0.7%; these compare to an increase of $20.1 trillion in 2021 or 3.6%
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.
