The Federal Reserve released their flow of funds Q2 report last Friday. Over 160 pages of data, the report shows debt, wealth, GDP distribution.
According to the Huffington Post, we just got a whole lot poorer (you are shocked I'm sure!):
The net worth of households and non-profit organizations dropped $1.52 trillion during the period from April 1 to June 30 of this year, according to the report released Friday. The new figure, $53.50 trillion, represents a 2.8 percent decline from the previous quarter..
Asset International analyzed the benefit and retirement plan assets, this isn't too good either:
US corporate defined benefit and defined contribution plans had combined assets of $5.32 trillion as of June 30, a 6.8% drop from three months earlier.
As of June 30, while corporate DB plan assets amounted to $2.05 trillion, down 5.4% from the previous quarter, corporate DC plan assets came to $3.27 trillion, down 7.5%, as reported by Pensions & Investments. Meanwhile, total assets in state and local government retirement funds were $2.56 trillion, down 8.2%, while the federal government’s retirement funds totaled $1.311 trillion, down 1%.
Other thing to note, The Federal government debt increased at a 24.4% annual rate in Q2 2010.
Here is a headline that sounds great on the surface, Household (that's you and me) Debt is down -2.3%, annualized for Q2 2010.
Oops, but wait, there is something called charge off, or when creditors just give up on trying to collect and write you off and throw you into the unscrupulous collector lion's den.
According to the Wall Street Journal in actuality, Americans have only reduced their debt by 0.08%....voluntarily.
0.08% — The annual rate at which U.S. consumers have pared down their debts since mid-2008, not counting defaults.
So, what is causing the dramatic debt reduction? Charge-offs, foreclosures, defaults. Americans simply cannot pay their bills any longer.
The Wall Street Journal went through the calculations and bottom line, American's debt reduction is more a reflection of more and more people going completely under, broke as broke gets.
Below is the graph of the net charge off rate. That's when MasterCard of Visa ships your debt to the collectors and closes down your card due to non-payment.