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.