We all know the American government is spending more and consumers are spending less, but the level of deleveraging in the household sector has picked up pace significantly, according to the Federal Reserve’s flow of funds report (via Zero Hedge).
Approximately $300 billion in household debt was paid down in Q2 2010, according to the report. This is the 9th quarterly decline in a row in household debt, and was at an annual rate of 2.25%. The severity of the debt-slashing hit a new record.
Household wealth fell by $1.5 trillion overall in Q2.
That’s government borrowing in purple, and negative household borrowing in blue.