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


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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