We’ve updated our US Flow of Funds chart book with data for the first quarter. I don’t see all that much deleveraging going on. Most of it is happening in the financial sector rather than the nonfinancial sector. The latter actually rose to a new record high of $38.6 trillion, up $5.6 trillion since Q1-2008. That was led entirely by the rise in US Treasury debt to a record $10.9 trillion, while the debt of the other nonfinancial sectors flattened out around $28 trillion.
There has been some modest deleveraging happening in the household sector, where outstanding debt peaked at a record $13.8 trillion during Q1-2008. It is now down to $12.9 trillion. On the other hand, nonfinancial business debt rose to a record $12.0 trillion during Q1. Nonfinancial corporations have taken advantage of record low interest rates to issue $400.0 billion in the bond market over the past four quarters. Some of these funds may be going into stock buybacks, as suggested by the net decline of $477.5 billion in nonfinancial corporate equities outstanding over the past four quarters.
Today's Morning Briefing: Déjà Vu All Over Again.(1) Industry analysts have seen this movie before. (2) Triple dip for revenue estimates. (3) Yet revenues are expected to grow. (4) Business sales at record high in April. (5) So far, Europe's recession hasn’t hit S&P 500 revenue forecasts. (6) Are we losing the American consumer again? (7) The weather channel. (8) Help wanted by small businesses. (9) A briefing on the flow of funds in the US. (10) Economists studying fertility. (11) Retailers correcting after outperforming. (More for subscribers.)