                                                                     For use at 12:00 p.m., eastern time
                                                                                              Thursday
                                                                                           June 9, 2005




FEDERAL RESERVE statistical release


Z.1




Flow of Funds Accounts
of the United States

Flows and Outstandings
First Quarter 2005




Board of Governors of the Federal Reserve System, Washington DC 20551

                                  Flow of Funds Summary Statistics
                                               First Quarter 2005

         Domestic nonfinancial debt rose at a                    quarter, while consumer credit increased at a 4-1/2
seasonally adjusted annual rate of 10 percent in the first       percent pace.
quarter of 2005. Debt growth in the first quarter was
above the fourth-quarter pace, reflecting faster growth                    In the first quarter, nonfinancial business debt
of federal government and state and local government             increased at an annual rate of 7-1/2 percent, similar to
debt.    On a seasonally adjusted basis, federal                 the fourth-quarter pace. The mix of business borrowing
government debt increased at an annual rate of 13-3/4            shifted somewhat in the first quarter, as net issuance of
percent in the first quarter, the fastest quarterly pace in      corporate bonds and net borrowing from banks
almost two years.        Meanwhile, state and local              decreased from the fourth-quarter pace, while net
government debt expanded at an annual rate of 16-1/4             issuance of commercial paper, mortgage borrowing, and
percent in the first quarter, as a significant volume of         borrowing from other intermediaries increased.
municipal bonds were issued for advance refunding of
existing debt.                                                             At the end of the first quarter of 2005, the
                                                                 seasonally adjusted level of domestic nonfinancial debt
         In the first quarter, household debt rose at a          outstanding was about $24.8 trillion.        Debt of the
seasonally adjusted annual rate of 9-1/4 percent, about          nonfederal sectors was a little more than $20.2 trillion
the same as in the previous quarter. Mortgage debt               and federal debt held by the public was just over $4.5
expanded at an annual rate of 10-1/2 percent in the first        trillion.




Growth of Domestic Nonfinancial Debt1
Percentage changes; quarterly data are seasonally adjusted annual rates


                                                                                Nonfederal

                                                                                                          State and
                   Total            Federal                Total      Households         Business
                                                                                                         local govts.

 1995                5.3              4.1                  5.7             7.1               7.2              -5.5
 1996                5.2              4.0                  5.7             6.8               6.2              -1.5
 1997                5.3              0.6                  7.0             6.0               9.0              4.0
 1998                6.8             -1.4                  9.5             7.8             12.3               6.3
 1999                6.4             -1.9                  8.9             8.3             10.7               3.4


 2000                4.8             -8.0                  8.3             8.7               9.4              1.3
 2001                6.2             -0.2                  7.6             8.8               6.1              8.9
 2002                6.9              7.6                  6.7             9.6               2.7             11.1
 2003                8.1            10.9                   7.5            10.1               4.3              8.2
 2004                8.6              9.0                  8.5            11.2               5.5              7.4


 2004: Q1            9.3            12.0                   8.7            11.8               4.6             10.3
       Q2            7.7            10.7                   7.0            10.3               3.7              3.4
       Q3            8.2              4.8                  8.9            11.4               5.7              9.4
       Q4            8.2              7.2                  8.4             9.4               7.7              5.6


 2005: Q1          10.0             13.8                   9.1             9.3               7.4             16.2


 1. Changes shown are on an end-of-period basis.

                                              Table of Contents



Title                                                                           Table     Page



Flow of Funds Accounts, First Quarter 2005                                                 1

Availability of Data for Latest Quarter                                                    3

Debt Growth by Sector                                                            D.1       6

Borrowing by Sector                                                              D.2       7

Debt Outstanding by Sector                                                       D.3       8




                                                                    Flows           Levels
Title                                                           Table    Page   Table     Page




Summaries

Total Net Borrowing and Lending in Credit Markets               F.1       9     L.1       58

Credit Market Borrowing by Nonfinancial Sectors                 F.2      10     L.2       59

Credit Market Borrowing by Financial Sectors                    F.3      10     L.3       59

Credit Market Borrowing, All Sectors, by Instrument             F.4      11     L.4       60

Total Liabilities and Its Relation to Total Financial Assets    F.5      11     L.5       60

Distribution of Gross Domestic Product                          F.6      12

Distribution of National Income                                 F.7      13

Saving and Investment                                           F.8      14

Net Capital Transfers                                           F.9      14

Derivation of Measures of Personal Saving                       F.10     15     L.10      61

                                                            Flows           Levels
Title                                                   Table    Page   Table     Page


Sectors

Households and Nonprofit Organizations                  F.100    16     L.100     62

Nonfinancial Business                                   F.101    17     L.101     63

         Nonfarm Nonfinancial Corporate Business        F.102    18     L.102     64

         Nonfarm Noncorporate Business                  F.103    19     L.103     65

         Farm Business                                  F.104    19     L.104     65

State and Local Governments                             F.105    20     L.105     66

Federal Government                                      F.106    21     L.106     66

Rest of the World                                       F.107    22     L.107     67

Monetary Authority                                      F.108    23     L.108     68

Commercial Banking                                      F.109    24     L.109     69

         U.S.-Chartered Commercial Banks                F.110    25     L.110     70

         Foreign Banking Offices in U.S.                F.111    26     L.111     71

         Bank Holding Companies                         F.112    27     L.112     72

         Banks in U.S.-Affiliated Areas                 F.113    27     L.113     72

Savings Institutions                                    F.114    28     L.114     73

Credit Unions                                           F.115    29     L.115     74

Bank Personal Trusts and Estates                        F.116    29     L.116     74

Life Insurance Companies                                F.117    30     L.117     75

Other Insurance Companies                               F.118    30     L.118     75

Private Pension Funds                                   F.119    31     L.119     76

State and Local Government Employee Retirement Funds    F.120    31     L.120     76

Federal Government Retirement Funds                     F.121    31     L.121     76

Money Market Mutual Funds                               F.122    32     L.122     77

                                                        Flows           Levels
Title                                               Table    Page   Table     Page



Mutual Funds                                        F.123    32     L.123     77

Closed-End and Exchange-Traded Funds                F.124    32     L.124     77

Government-Sponsored Enterprises                    F.125    33     L.125     78

Agency- and GSE-backed Mortgage Pools               F.126    33     L.126     78

Issuers of Asset-Backed Securities                  F.127    34     L.127     79

Finance Companies                                   F.128    34     L.128     79

Mortgage Companies                                  F.129    35     L.129     80

Real Estate Investment Trusts                       F.130    35     L.130     80

Security Brokers and Dealers                        F.131    36     L.131     81

Funding Corporations                                F.132    36     L.132     81




Instruments

Gold and Official Foreign Exchange Holdings         F.200    37     L.200     82

SDR Certificates and Treasury Currency              F.201    37     L.201     82

U.S. Deposits in Foreign Countries                  F.202    37     L.202     82

Net Interbank Transactions                          F.203    38     L.203     83

Checkable Deposits and Currency                     F.204    39     L.204     84

Time and Savings Deposits                           F.205    40     L.205     85

Money Market Mutual Fund Shares                     F.206    40     L.206     85

Federal Funds and Security Repurchase Agreements    F.207    41     L.207     86

Open Market Paper                                   F.208    41     L.208     86

Treasury Securities                                 F.209    42     L.209     87

                                                                    Flows            Levels
Title                                                          Table     Page   Table     Page



Agency- and GSE-backed Securities                               F.210    43     L.210      88

Municipal Securities and Loans                                  F.211    44     L.211      89

Corporate and Foreign Bonds                                     F.212    44     L.212      89

Corporate Equities                                              F.213    45     L.213      90

Mutual Fund Shares                                              F.214    45     L.214      90

Bank Loans Not Elsewhere Classified                             F.215    46     L.215      91

Other Loans and Advances                                        F.216    47     L.216      92

Total Mortgages                                                 F.217    48     L.217      93

         Home Mortgages                                         F.218    49     L.218      94

         Multifamily Residential Mortgages                      F.219    49     L.219      94

         Commercial Mortgages                                   F.220    50     L.220      95

         Farm Mortgages                                         F.221    50     L.221      95

Consumer Credit                                                 F.222    51     L.222      96

Trade Credit                                                    F.223    51     L.223      96

Security Credit                                                 F.224    51     L.224      96

Life Insurance and Pension Fund Reserves                        F.225    52     L.225      97

Taxes Payable by Businesses                                     F.226    52     L.226      97

Investment in Bank Personal Trusts                              F.227    52     L.227      97

Proprietors' Equity in Noncorporate Business                    F.228    52     L.228      97

Total Miscellaneous Financial Claims                            F.229    53     L.229      98

         Identified Miscellaneous Financial Claims - Part I     F.230    54     L.230      99

         Identified Miscellaneous Financial Claims - Part II    F.231    55     L.231     100

         Unidentified Miscellaneous Financial Claims            F.232    56     L.232     101

Sector Discrepancies                                            F.11     57

Instrument Discrepancies                                        F.12     57

                                                                    Balance       Reconciliation
                                                                     Sheet
Title                                                           Table     Page   Table      Page



Balance Sheet and Reconciliation Tables

Households and Nonprofit Organizations                           B.100    102    R.100      105

Nonfinancial Corporate Business                                  B.102    103    R.102      106

Nonfarm Noncorporate Business                                    B.103    104     R.103     107




                                                                     Flows           Levels
Title                                                           Table     Page   Table      Page



Supplementary Tables

Nonprofit Organizations                                          F.100.a  108    L.100.a    109

Consolidated Statement for Federal, State, and Local Governments F.106.c  110    L.106.c    111

Private Pension Funds: Defined Benefit Plans                     F.119.b  112    L.119.b    113

Private Pension Funds: Defined Contribution Plans                F.119.c  112    L.119.c    113

Individual Retirement Accounts (IRAs)                            F.225.i  112    L.225.i    113

Flow of Funds Matrix for 2004                                             114               115

Balance Sheet of Households and Nonprofit Organizations
 with Equity Detail                                                              B.100.e    116

                                                                                                                  1




                        Flow of Funds Accounts, First Quarter 2005

         This publication presents the flow of funds        institutions.    Credit market debt consists of debt
accounts for 2005:Q1.                                       securities, mortgages, bank loans, commercial paper,
                                                            consumer credit, U.S. government loans, and other
Data revisions and other changes. The statistics in         loans and advances; it excludes trade debt, loans for the
the attached tables reflect the use of new or revised       purpose of carrying securities, and funds raised from
source data. Most significant revisions appear in recent    equity sources.
quarters; however, new source information resulted in
changes to data for earlier periods.                                  Growth rates in table D.1 are calculated by
                                                            dividing seasonally adjusted flows from table D.2 by
1.       Assets of the nonfarm nonfinancial corporate       seasonally adjusted levels at the end of the previous
business sector (tables F.102 and L.102) were revised       period from table D.3. Seasonally adjusted levels in
from 2002:Q1 onward to reflect final data from the          flow of funds statistics are derived by carrying forward
Internal Revenue Service (IRS) Statistics of Income         year-end levels by seasonally adjusted flows. Growth
(SOI) for 2002 and advance data for 2003.                   rates calculated from changes in unadjusted levels
                                                            printed in table L.2 can differ from those in table D.1.
2.       For the nonfarm nonfinancial corporate
business sector (table F.102) a portion of foreign          Relation of Flows to Outstandings. Estimates of
earnings retained abroad (line 6) has been reallocated to   financial assets and liabilities outstanding are linked to
financial corporations. Gross saving for U.S.-chartered     data on flows.      However, figures on outstandings
commercial banks (table F.110), life insurance              contain discontinuities or breaks in series that could
companies (table F.117), other insurance companies          affect analysis of particular relationships over time
(table F.118), finance companies (table F.128), and         specifically, outstanding in the flow of funds accounts
brokers and dealers (table F.131) now includes a            are related to the flows in the following way:
portion of the foreign earnings retained abroad
previously allocated to the nonfarm nonfinancial            Outstanding = Outstanding + Flow + Discontinuity
                                                                         t                t-1      t                t

corporate business sector.                                  where "t" is the time period.

                                                                      Discontinuities result from changes in
3.       In the state and local governments sector
                                                            valuation, breaks in source data, and changes in
(tables F.105 and L.105), all categories of financial
                                                            definitions. For most series, the value of the
assets have been revised since 2002:Q3, reflecting new
                                                            discontinuity is zero for nearly all time periods.
benchmark data on total financial assets from the
                                                            However, in a few instances, the discontinuity is
Census Bureau.
                                                            nonzero for almost all time periods, or is quite large in a
                                                            particular quarter, such as a period when there is a
4.       In the issuers of asset-backed securities sector
                                                            sharp increase or decrease in equity prices or a major
(tables F. 127 and L.127), trade receivables have been
                                                            break in source data.
revised from 1995:Q3 forward, reflecting new data on
the collateral of asset-backed commercial paper.
                                                                      The discontinuities in a series can distort
                                                            estimated rates of growth in assets and liabilities
5.       Consumer      credit   held  by nonfinancial
                                                            between periods.        In order to minimize these
corporate businesses and total consumer credit (tables
                                                            distortions, percentage changes in assets and liabilities
F.222 and L.222) have been revised from 1997:Q4
                                                            in flow of funds releases should be calculated as:
forward owing primarily to re-estimation of seasonal
factors.
                                                            Percentage change = (Flow / Outstanding ) * 100
                                                                                 t          t              t-1

Explanatory notes for tables D.1, D.2, and D.3.
                                                            Preliminary Estimates. Figures shown for the most
Domestic debt comprises credit market funds borrowed
                                                            recent quarter in these tables are based on preliminary
by U.S. entities from both domestic and foreign
                                                            and incomplete information. A summary list of the
sources, while foreign debt represents amounts
                                                            principal sources of information available when the
borrowed by foreign financial and nonfinancial entities
                                                            latest quarter's data were compiled is provided in a table
in U.S. markets only. Financial sectors consist of
                                                            following this introduction. The distinction between
government-sponsored enterprises, agency- and GSE-
                                                            "available" data and "missing" data is not between final
backed    mortgage pools,       and  private financial

2



 and preliminary versions of data, but rather between             http://www.federalreserve.gov/releases/Z1
 those source estimates that are fully ready when the
 latest quarterly publication is compiled and those that               The Internet site also provides quarterly data
 are not yet completed. However, the items that are           beginning in 1952, organized in compressed files that
 shown as available are, in general, also preliminary in      correspond to the tables published in this release.
 the sense that they are subject to revision by source        There are files for quarterly data for seasonally
 agencies.                                                    adjusted flows, unadjusted flows, outstandings, balance
                                                              sheets, and debt (tables D.1, D.2, and D.3).
 Margins of Uncertainty. Flow of funds statistics are
 subject to uncertainties resulting from measurement                   A Guide to the Flow of Funds Accounts
 errors in source data, incompatibilities among data from     is available. The 1,200-page Guide, published in two
 different sources, potential revisions in both financial     volumes in January 2000, explains in detail how the
 and nonfinancial series, and incomplete data in parts of     U.S. financial accounts are prepared and the principles
 the accounts. The size of these uncertainties cannot be      underlying the accounts. The Guide can be purchased
 quantified in precise statistical terms, but allowance for   for $20.00 from the Board's Publications Services.
 them is explicitly made throughout the accounts by the       Publications Services accepts orders accompanied by
 inclusion of "discrepancies" for various sectors and         checks as well as credit card orders.
 instrument types. A discrepancy for a sector is the
 difference between its measured sources of funds and                  The Internet site for this release at the location
 its measured uses of funds. For an instrument category,      shown above contains a link to an order form for the
 a discrepancy is the difference between measured funds       Guide that can be mailed or faxed to Publications
 borrowed through the financial instrument and                Services. In addition, the Internet site includes a link to
 measured funds lent through that instrument. The size        the Guide's descriptions of the tables in the flow of
 of such discrepancies relative to the main asset or          funds accounts.
 liability components is one indication of the quality of
 source data, especially on an annual basis. For              Subscription Information.         The Federal Reserve
 quarterly data, differences in seasonal adjustment           Board charges for subscriptions to all statistical
 procedures for financial and nonfinancial components         releases. Inquiries for releases should be directed to:
 of the accounts sometimes result in discrepancies that
 cancel in annual data.                                                  Publications Services, Stop 127
                                                                               Board of Governors
 Availability of Data. Flow of funds statistics are                       of the Federal Reserve System
 updated about ten weeks following the end of a quarter.           20th Street and Constitution Avenue, N.W.
 This publication -- the Z.1 release -- is available from                    Washington, DC 20551
 the Board's Publications Services. Flow of funds data                           (202) 452-3244
 are also available electronically through the Internet at
 the following location:

                                                                                                             3



                         Availability of Data for Latest Quarter



                                   Available at time of publication           Major items missing


1. National income and             Preliminary estimates, seasonally          Unadjusted flows since 2003 and
   product accounts (NIPA)         adjusted, for 2005:Q1.                     some profit-related items.

2. Households and nonprofit        Estimates for this sector are largely residuals and are derived from data for
   organizations sector            other sectors. Availability of data depends on schedules for other sectors.
   (tables F.100 and L.100)        Data for consumer credit, which are estimated directly, are available
                                   through 2005:Q1. The source for nonprofit organizations data (tables
                                   F.100.a and L.100.a) is the Internal Revenue Service Statistics of Income.
                                   Data for nonprofit organizations are available for 1987 through 2000.

3. Nonfarm nonfinancial            Quarterly Financial Report (QFR) of         Statistics of Income data since
   corporate business              the Census Bureau through 2004:Q4;          2003.
   (tables F.102 and L.102)        Internal Revenue Service Statistics of
                                   Income (IRS/SOI) preliminary data
                                   through 2003; securities offerings,
                                   mortgages, bank loans, commercial
                                   paper, and other loans through
                                   2005:Q1.

4. Nonfarm noncorporate            IRS/SOI data through 2002; bank and         Statistics of Income data since
   business                        finance company loans and mortgage          2002.
   (tables F.103 and L.103)        borrowing through 2005:Q1.

5. Farm business                   Mortgages, bank loans, loans from           Consumption of fixed capital and
   (tables F.104 and L.104)        government-sponsored enterprises,           undistributed profits since 2001.
                                   U.S. government loans to farms, and
                                   equity in government-sponsored
                                   enterprises through 2005:Q1;
                                   preliminary data for checkable deposits
                                   and currency and trade payables
                                   through 2003.

6. State and local governments     Gross offerings and retirements of          Selected financial asset items
  (tables F.105 and L.105)         municipal securities, deposits at banks,    since 2003:Q2.
                                   and nonmarketable U.S. government
                                   security issues through 2005:Q1;
                                   selected financial assets through
                                   2003:Q2 from Census data and the
                                   comprehensive annual financial reports
                                   of state and local governments.




7. Federal government              Data from the Monthly Treasury              None.
   (tables F.106 and L.106)        Statement of Receipts and Outlays
                                   through 2005:Q1; Treasury data for
                                   loan programs through 2005:Q1.

4



  8. Rest of the world                Balance of payments data through        Balance of payments data for
     (U.S. international              2004:Q4; NIPA estimates; data from      2005:Q1.
      transactions)                   bank Reports of Condition and
     (tables F.107 and L.107)         Treasury International Capital System
                                      through 2005:Q1.


  9. Monetary authority               All data through 2005:Q1.               None.
      (tables F.108 and L.108)


  10. Commercial banking              All data through 2005:Q1 for            Data since 2003 for branches of
      (tables F.109 through F.113     U.S.-chartered commercial banks,        domestic commercial banks
      and tables L.109 through        foreign banking offices in the U.S.,    located in U.S.-affiliated areas.
      L.113)                          bank holding companies, and
                                      commercial banks in U.S.-affiliated
                                      areas.

  11. Savings institutions            All data through 2005:Q1.               None.
     (tables F.114 and L.114)

  12. Credit unions                   All data through 2005:Q1.               None.
     (tables F.115 and L.115)


  13. Bank personal trusts and        All data through 2004:Q4; total assets  Asset detail for 2005:Q1.
      estates                         for 2005:Q1.
     (tables F.116 and L.116)

  14. Life insurance companies        All data through 2004:Q3; preliminary   Final data since 2004:Q3.
     (tables F.117 and L.117)         data for 2004:Q4.


  15. Other insurance companies       All data through 2004:Q3; preliminary   Final since for 2004:Q3.
     (tables F.118 and L.118)         data for 2004:Q4.


  16. Private pension funds           Quarterly data through 2005:Q1;         Form 5500 data since 2000.
      (tables F.119 and L.119)        Internal Revenue Service/Department
                                      of Labor/Pension Benefit Guaranty
                                      Corporation Form 5500 data through
                                      2000.

  17. State and local government      All data through 2004:Q3.               Data since 2004:Q3.
      employee retirement funds
      (tables F.120 and L.120)


  18. Federal government retirement   Data from the Monthly Treasury          None.
      funds                           Statement, the Thrift Savings Plan, and
      (tables F.121 and L.121)        the National Railroad Retirement
                                      Investment Trust through 2005:Q1.

                                                                              None.
  19. Money market mutual             All data through 2005:Q1.
      funds
      (tables F.122 and L.122)

  20. Mutual funds                    All data through 2005:Q1.               None.
     (tables F.123 and L.123)

                                                                                                             5



21. Closed-end funds            All data through 2005:Q1.                   None.
   (tables F.124 and L.124)

22. Exchange-traded funds       All data through 2005:Q1.                   None.
   (tables F.124 and L.124)


23. Government-sponsored        Data for FHLBs, Farmer Mac, FCS,            Data after 2004:Q4 for Freddie
    enterprises                 FICO and REFCORP through                    Mac; data after 2004:Q2 for
   (tables F.125 and L.125)     2005:Q1.                                    Fannie Mae.

24. Agency- and GSE-backed      All data through 2005:Q1.                   None.
    mortgage pools
   (tables F.126 and L.126)

25. Issuers of asset-backed     All data for private mortgage pools,        None.
    securities (ABSs)           consumer credit, business loans,
   (tables F.127 and L.127)     student loans, consumer leases, and
                                trade credit securitization through
                                2005:Q1.

26. Finance companies           All data through 2005:Q1.                   None.
    (tables F.128 and L.128)

27. Mortgage companies          Mortgage data through 1997:Q4.              Data after 1997:Q4.
   (tables F.129 and L.129)

28. Real estate investment      Data from SNL REIT DataSource               None.
    trusts (REITs)              through 2005:Q1.
    (tables F.130 and L.130)

29. Security brokers and        Data for firms filing FOCUS and             None.
    dealers                     FOGS reports through 2005:Q1.
    (tables F.131 and L.131)

30. Funding corporations        Estimates for this sector are largely residuals and are derived from data for
   (tables F.132 and L.132)     other sectors.

