Yesterday the Federal Reserve updated quarterly sector debt levels for the US economy in its Z.1 Flow of Funds report. We discussed the full report in greater detail in The Closer last night, but we want to highlight a key observation. Below we show the YoY growth of debt for the United States by major sector. Each sub category sums to the total 4.49% YoY growth in debt.
While debt has been growing – and at a generally accelerating pace – since bottoming out in 2011, it’s been doing so at a pace much slower than anything seen since the 1950s. Even though Q4 2018 saw debt grow at the second-fastest YoY pace of the post-crisis period, only one quarter since 1951 saw debt grow at a slower pace than current. While government debt has grown relatively quickly in the post-crisis period, almost all other sectors have seen much slower contributions to total debt growth than has been typical historically. Corporate debt has been the exception, though even that sector has seen debt growth at the low end of the historical norm. State and local governments, households, and the financial sector have all seen extremely slow debt growth.