Friday, 10 December 2004

Debt growth in US accelerated in third quarter

The latest Federal Reserve Flow of Funds Accounts show that debt growth in the US accelerated in the third quarter.

Total debt rose at a seasonally adjusted annual rate of 7.4 percent in the third quarter, up from the 7 percent rate of the previous quarter. On a seasonally adjusted basis, federal debt growth fell to an annual rate of 5 percent in the third quarter from 10.7 percent the previous quarter. However, nonfederal debt accelerated, with household debt rising at an annual rate of 9.1 percent in the third quarter compared to 8.5 percent the previous quarter, and business debt rising at a 5.1 percent rate compared to 3.6 percent the previous quarter.

The acceleration in debt growth has provided the fuel to pull the US economy up from its second quarter slowdown. The question, of course, is how much longer this fuel can last.

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