Deciphering Today’s Fed Speak

The Fed’s Z.1 Flow of Funds came out today for Q4.  The press always focuses on Household Net Worth, but I just want to mention a few things from the summary tables of debt growth.

Over 2015, the big categories of debt growth DECELERATED.  For example, Household Mortgage Growth was only 1.5% in Q4 vs 1.7 in Q3.  Consumer Credit decelerated for the last three quarters.  Corporate debt decelerated over the past three quarters, though the absolute level of $8.097T is at a record.  State and local gov’t debt fell to zero growth in Q4.  For some reasons the Federal Gov’t Growth Rate exploded at an 18.5% rate to a record $15.166 T.  Decelerating growth levels of debt means deceleration in the economy.  It’s that simple.

If table cannot be viewed here are last 3 qtrs growth rates, Q2, Q3, Q4:  Mortgage 2.5, 1.7, 1.5.  Cons Cred 8.5, 7.2, 5.9.  Corp 8.6, 4.6, 2.7.  State/local govt 1.0, 1.7, 0.0.  Fed govt 2.4, 0.2, 18.5.