Government debt rose at a 59% pace in Q2 amid effort to halt virus

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Government and business debt soared in the second quarter as the U.S. dealt with the coronavirus pandemic, even as personal net worth rose and consumer credit plunged at a record level.

A Federal Reserve report released Monday showed the total household balance sheet in the U.S. rose to nearly $119 trillion in the April-through-June period, a 6.8% increase from the first quarter.

The gain in net worth was driven almost exclusively by the stock market.

Thanks in large part to unprecedented fiscal and monetary stimulus, the S&P 500 gained 20% during the quarter. That in turn led to a $5.7 trillion rise in net worth, or 75% of the total increase. Real estate contributed $500 million.

As financial assets climbed, debt, at least at the household level, went nowhere.

In fact, consumer credit tumbled at a post-World War II record 6.6% annual pace thanks in large part to a decline in credit card balances to $953.8 billion from $1.02 trillion. Student loan debt was little changed at $1.68 trillion, while auto loans edged higher to just shy of $1.2 trillion. – READ MORE

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