Friday, June 12, 2009

Is the Debt Binge Over?

The Fed released the Flow of Funds report yesterday. I'll be delving into it next week as it provides some of the most valuable and comprehensive data available on the US economy. But for now, simply consider these data points:

More wealth disappeared in the U.S. this year, and both households and businesses reduced their borrowing, a Federal Reserve report says.

The data Thursday also indicated slower commercial mortgage borrowing.

The Fed said total net worth of households fell 2.6%, or $1.33 trillion, in the first quarter, as their property values fell and portfolios shrank before stock prices rallied in March.

Net worth dropped to $50.38 trillion from $51.71 trillion in the fourth quarter. Net worth is assets minus liabilities. The 2.6% drop followed a decline of 8.6% during the fourth quarter.


And then there is a possible change in US attitudes about debt:

Click on these charts for a larger image: