Q1 Flow Of Fund Indicates Ongoing Private Sector Credit Contraction, Consumer Wealth Growth Due Purely To Equities
Courtesy of Tyler Durden at Zero Hedge
The Federal Reserve has released the most recent Flow Of Funds Statement (Z.1). Plenty of data in there and we will provide a more in depth analysis later, but here are the highlights. Total household Net Worth increased by $1.1 trillion from $53.4 trillion at Q4 2009, to $54.6 trillion at March 31, 2010. However, of this incrase, the vast bulk was purely on "paper" – $0.8 was due to an increase in direct and indirect holdings of equity instruments. Credit market instruments also increased in net worth but only slightly, accounting for the balance of the increase. Decreasing components were tangible assets, which declined by $67 billion, and physical deposits, which declined by $104 billion. As the bulk of the equity instruments gains have been paper based, it is safe to say that consumer net worth as of June 30, will be materially lower than this most recent report indicates. We will therefore likely see a material decline on household net worth when it is released in early September.
As for credit in the system, thank god for the government. The US government added $0.4 trillion in total debt outstanding, even as credit at the domestic financial sector declined by $0.6 trillion: the fourth sequential decline in the domestic financial sector. Consumer credit, after posting a sixth sequential decline, dropped by $10 billion, as did Home Mortgage debt ($100 billion). The private to public debt transfer continues. Total credit (domestic financial and non financial) as well as foreign, declined by $300 billion quarter over quarter. The deflationary deleveraging continues.
Total household net worth by component:
QoQ change in household net worth:
Total debt outstanding by holder:
QoQ change in total debt outstanding by holder:
