The Z1 flow of funds report just came out and the debt figures really jumped out at me:
“Debt of the domestic nonfinancial sectors expanded at a seasonally adjusted annual rate of 6½ percent in
the fourth quarter of 2012, 4 percentage points more than in the third quarter.
Household debt increased at an annual rate of 2½ percent in the fourth quarter. Home mortgage debt
contracted ¾ percent, continuing the downtrend that commenced in early 2008, while consumer credit
rose at an annual rate of 6½ percent.
Nonfinancial business debt rose at an annual rate of 8¾ percent in the fourth quarter, a somewhat faster
pace than in the third quarter. As in recent years, corporate bonds accounted for the largest increase.”
And this doesn’t account for what will be an inevitable rise in mortgage debt (the biggest piece of the pie) in 2013. You’ve gotta start wondering at this point – is the balance sheet recession over? Are households done de-leveraging? It is sure beginning to look that way….
I’ll crunch the sectoral numbers and get back to you….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.