U.S. Financial Accounts Show Decreased Borrowing and Decreased Net Wealth in Q2
Summary
- Q2 borrowing decreases but still sizable for non-COVID periods.
- Total business – corporate and noncorporate together – had the largest sectoral credit demand.
- Household and federal government borrowing both decreased.
- Household net worth and U.S. total net wealth also fell.
Borrowing in the U.S. economy was $5.844 trillion in Q2 2022, down from $8.111 trillion in Q1, both cited at seasonally adjusted annual rates. Q2’s borrowing represented 23.5% of GDP, down from 33.3% in Q1. The revision to the Q1 data took it down from the 37.9% of GDP reported in the June release, which at the time was a record amount of quarterly borrowing except for the 2020 COVID period. Revisions to the Financial Accounts data are frequent, so this is not a unique development.
Total business had the largest borrowing by sector in Q2, $1.466 trillion, somewhat more than $1.456 in Q1. Nonfinancial corporate businesses borrowed $977 billion in Q2, up from $970 billion in Q1. Within that sector, commercial paper issuance was a record amount in Q2, $268 billion, while corporate bonds saw net paydowns of $193 billion. Noncorporate businesses borrowed $489 billion in Q2, up from $485 in Q1.
In Q2, the federal government borrowed $1.443 trillion, down from $2.586 trillion in Q1.
Households borrowed $1.355 trillion in Q2, down from $1.481 in Q1. The Q2 amount was 7.3% of disposable income. One-to-four family home mortgage borrowing was $1.047 trillion, slightly more than $1.016 in Q1. Consumer credit rose $385 billion, marginally more than the $373 billion in Q1.
Domestic financial institutions borrowed $1.088 trillion in Q2, down from $2.253 trillion in Q1. The Q2 amount consisted of $936 billion in debt securities and $152 billion in loans.
Foreign borrowers, both private and governmental institutions, borrowed $440 billion in Q2, slightly more than the $434 billion in Q1.
Net wealth in the U.S. economy decreased $5.953 trillion in Q2, not seasonally adjusted or annualized, after a modest increase of $552 billion in Q1. Household net worth fell $6.100 trillion in Q2 following a $147 billion decrease in Q1.
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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