Government debt rose 59% in the second quarter amid efforts to stop the coronavirus
The U.S. Capitol is located in Washington, D.C., on Tuesday, September 8, 2020.
Stephanie Reynolds | Bloomberg | Getty Images
Government and commercial debt rose in the second quarter as the US dealt with Coronavirus pandemic, Even as personal net worth rose and consumer credit tumbled at a record low.
A Federal Reserve report released on Monday showed that the total balance sheet of US households rose to nearly $ 119 trillion in the April-June period, a 6.8% increase from the first quarter.
Gains in net worth were driven exclusively by the stock market.
Thank you very much Unprecedented financial and monetary stimulus, The S&P 500 rose 20% during the quarter. This in turn led to a $ 5.7 trillion increase in net worth, or 75% of the total increase. The real estate contributed $ 500 million.
As financial assets have risen, debt has gone nowhere, at least at the household level.
Indeed, consumer credit declined at a record pace after World War II of 6.6%, thanks in large part to a drop in credit card balances to $ 953.8 billion from $ 1.02 trillion. Student loan debt was unchanged at $ 1.68 trillion, while auto loans rose to just $ 1.2 trillion.
This came as the federal government and companies continued to escalate debt. Altogether, the total nonfinancial domestic debt reached $ 59.3 trillion.
Federal government debt has exploded at a pace of 58.9% as Congress passed the CARES Act to support an economy that went into lockdown at the end of the first quarter to combat the spread of Covid-19.
Nonfinancial trade debt rose 14%, which is actually less than the 18.4% rise in the first quarter, but still significantly higher than any pre-epidemic level dating back to at least 1980. The state government debt rose by 3.5%, the fastest since 2009.
The data comes from the Fed’s quarterly financial accounts survey, formerly known as Funds Stream.
Rachel Montgomery is a contributor at Prudent Press Agency, covering a wide range of topics including news, politics, business, technology, sports, entertainment, and lifestyle. She focuses on delivering clear, accurate, and reader-focused reporting that helps audiences stay informed about current events and important developments. Her work emphasizes useful information, balanced coverage, and stories that matter to everyday readers, making complex topics accessible and relevant.
