Financial Accounts Show Borrowing Up in Q4, But 2023 Down from 2022
Summary
- Federal gov’t largest borrowing sector, with highest ratio to GDP since 2009, except for the Covid period.
- U.S. households reduced their borrowing in Q4, for mortgages in particular.
- Businesses also borrowed less in Q4.
The Federal Reserve’s Financial Accounts report for the fourth quarter of 2023 was published Thursday, March 7. It showed that total borrowing in U.S. financial markets was $4.466 trillion in Q4, up from $3.537 trillion in Q3, both shown at seasonally adjusted annual rates. These amounted to 16.0% of GDP in Q4 and 12.8% in Q3. For all of 2023, borrowing was $4.138 trillion, equal to 15.1% of GDP; this borrowing was down from $5.696 trillion in 2022, or 22.1% of GDP. Note that all the quarterly amounts cited here are all shown at seasonally adjusted annual rates.
Borrowing by domestic nonfinancial sectors of the U.S. economy was $3.500 trillion, saar, in Q4, down from $3.874 trillion in Q3. In 2023, the federal government was by far the largest borrowing sector, with $2.877 trillion in Q4, just slightly less than $2.968 trillion in Q3. These quarterly amounts represented 10.3% of GDP in Q4 and 10.8% in Q3. For all of 2023, federal borrowing as a ratio to GDP was 9.6%, the largest since the aftermath of the 2008-2009 recession, except for the Covid contraction in 2020, which drove this ratio to 21.5%.
For other borrowing needs in 2023, the Q4 amount included $485 billion in household debt, which was down from $622 billion in Q3. These household amounts, in turn, included $266 billion in 1-4 family residential mortgages in Q4, down from $459 billion in Q3, and $165 billion in consumer credit in Q4, a sizable increase from $27 billion in Q3.
In Q4, nonfinancial businesses borrowed $173 billion, down noticeably from $294 billion in Q3 and the smallest amount since the post-Covid period of Q4 2020, when they borrowed “just” $25 billion, again at a seasonally adjusted annual rate. The Q4 2023 amount included a modest $20 billion in net new corporate debt, down from $178 billion in Q3. Noncorporate businesses borrowed $153 billion in Q4, actually up from $116 billion in Q3.
State and local governments paid down modest amounts of debt in Q3 and Q4 of 2023, $10 billion and $35 billion, respectively, with net borrowing of $21 billion for the whole year. They had paid down $52 billion in 2022.
Financial institutions borrowed $695 billion in Q4 2023 after paying down $452 billion in Q3, both again at seasonally adjusted annual rates. For all of 2023, financial institutions borrowed $344 billion, noticeably less than $1.623 trillion in 2022.
Foreign borrowers utilized $271 billion in U.S. markets in Q4 2023 after $115 billion in Q3. For all of last year, they borrowed $169 billion, less than the $287 billion in 2023.
Net wealth in the U.S. economy rose to a new record at the end of Q4, reaching $143.6 trillion, up from $141.0 trillion at the end of Q3 and $134.7 trillion at the end of 2023. Household net worth was $156.2 trillion at year-end, up from $151.4 trillion at the end of Q3 and $144.6 trillion at the end of 2022. The household net worth at year-end was also an all-time high.
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); those nonfinancial data 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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