                                                                     For use at 12:00 p.m., eastern time
                                                                                                Monday
                                                                                   September 17, 2007




FEDERAL RESERVE statistical release


Z.1




Flow of Funds Accounts
of the United States

Flows and Outstandings
Second Quarter 2007




Board of Governors of the Federal Reserve System, Washington DC 20551

                                  Flow of Funds Summary Statistics
                                  CC




                                            Second Quarter 2007

          Debt of the domestic nonfinancial sectors           exceeded the pace in the preceding quarter.
expanded     at a seasonally adjusted   annual     rate of
7 percent in the second quarter of 2007, 3/4 percentage                 State and local government debt increased at
point  less   than   in  the  previous  quarter.      The     an annual rate of 12 percent last quarter, a slightly
deceleration in the second quarter was in the federal         stronger   pace   than  in  the  first  quarter. Federal
government      sector, with the business and state and       government debt contracted at an annual rate of 1-1/2
local government sectors showing modest increases in          percent in the second quarter of 2007 after having
the rate of debt growth.                                      expanded 6-3/4 percent in the previous quarter.

          Household debt expanded at an annual rate of                  At the end of the second quarter of 2007, the
7 percent in the second quarter of 2007, the same pace        level of domestic nonfinancial debt outstanding was
as in the first quarter. In the second quarter, growth of     $29.9 trillion.   Household debt amounted to $13.3
home mortgage debt increased at an annual rate of             trillion, and nonfinancial business debt was $9.5
7-1/4 percent--the slowest quarterly growth rate since        trillion. Combined, state and local governments and the
mid-1998. Meanwhile, in the second quarter, consumer          federal government had outstanding debt of $7.1
credit grew at a rate of 5 percent, staying within its        trillion.
recent range.
                                                                        Household net worth--the difference between
          Nonfinancial business debt rose at an annual        the    value   of     assets   and    liabilities--totaled
rate of 10-1/2 percent in the second quarter of 2007,         $57.8 trillion at the end of the second quarter of 2007,
1-3/4 percentage points faster than in the previous           almost $1.2 trillion dollars more than in the preceding
quarter. In the second quarter, net issuance of open          quarter.
market    paper,   corporate    bonds,  and      mortgages


Growth of Domestic Nonfinancial Debt1
                                            P
                                                P




Percentage changes; quarterly data are seasonally adjusted annual rates
                                                                                  State and
                             Total           Households       Business                                   Federal
                                                                                 local govts.
 1997                         5.3                  5.8          9.0                  4.3                    0.6
 1998                         6.8                  7.8         12.3                  6.3                   -1.4
 1999                         6.4                  8.3         10.6                  3.4                   -1.9
 2000                         4.9                  9.1          9.1                  1.3                   -8.0
 2001                         6.4                  9.6          5.9                  8.8                   -0.2

 2002                         7.3                 10.8          2.5                11.0                     7.6
 2003                         8.1                 11.5          2.6                  8.3                  10.9
 2004                         8.9                 11.4          5.8                  7.4                    9.0
 2005                         9.0                 10.5          7.7                10.2                     7.0
 2006                         8.7                 10.0          9.6                  8.2                    3.9

 2006:Q1                      9.9                 11.0         10.3                  5.6                    8.0
       Q2                     8.0                 10.6          8.5                  7.3                    1.0
       Q3                     7.2                  8.7          6.9                  7.7                    3.6
       Q4                     8.4                  8.0         11.4                11.4                     2.8


 2007:Q1                      7.9                  7.1          8.9                11.1                     6.7
       Q2                     7.1                  7.1         10.6                11.9                    -1.4
1. Changes shown are on an end-of-period basis.

                                              Table of Contents



Title                                                                            Table     Page



Flow of Funds Accounts, Second Quarter 2007                                                 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

Property-Casualty Insurance Companies                   F.116     29     L.116      74

Life Insurance Companies                                F.117     30     L.117      75

Private Pension Funds                                   F.118     30     L.118      75

State and Local Government Employee Retirement Funds    F.119     31     L.119      76

Federal Government Retirement Funds                     F.120     31     L.120      76

Money Market Mutual Funds                               F.121     32     L.121      77

Mutual Funds                                            F.122     32     L.122      77

                                                        Flows            Levels

Title                                               Table    Page    Table     Page



Closed-End and Exchange-Traded Funds                F.123     32     L.123      77

Government-Sponsored Enterprises                    F.124     33     L.124      78

Agency- and GSE-backed Mortgage Pools               F.125     33     L.125      78

Issuers of Asset-Backed Securities                  F.126     34     L.126      79

Finance Companies                                   F.127     34     L.127      79

Real Estate Investment Trusts                       F.128     35     L.128      80

Security Brokers and Dealers                        F.129     36     L.129      81

Funding Corporations                                F.130     36     L.130      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

Proprietors' Equity in Noncorporate Business                    F.227     52      L.227      97

Total Miscellaneous Financial Claims                            F.228     53      L.228      98

         Identified Miscellaneous Financial Claims - Part I     F.229     54      L.229      99

         Identified Miscellaneous Financial Claims - Part II    F.230     55      L.230     100

         Unidentified Miscellaneous Financial Claims            F.231     56      L.231     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.118.b  112      L.118.b   113

Private Pension Funds: Defined Contribution Plans                F.118.c  112      L.118.c   113

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

Flow of Funds Matrix for 2006                                             114                115

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




                      Flow of Funds Accounts, Second Quarter 2007

         This publication presents the flow of funds          7.        The government-sponsored enterprises sector
accounts for 2007:Q2.                                         (tables F.124 and L.124) was revised beginning in
                                                              2003:Q4 to reflect newly released balance sheet data
Data revisions and other changes. The statistics in           from Fannie Mae, Freddie Mac, and the Federal Home
the attached tables reflect the use of new or revised         Loan Banks.
source data. Most significant revisions appear in recent
quarters; however, new source information resulted in         8.        Total consumer credit (tables F.222 and
changes to data for earlier periods.                          L.222) has been revised from 1994:Q3 forward owing
                                                              to new seasonal factors and other changes reflected in
1.       Seasonal factors for quarterly flows have been       the Board's G.19 statistical release on September 10,
recalculated for the period 1997:Q1 onward.          The      2007.
factors were generated using the X-12-ARIMA/88
seasonal adjustment program from Statistics Canada.           9.        Identified miscellaneous financial claims 
                                                              part II (tables F.230 and L.230) now includes the Postal
2.       The statistics in this publication reflect the       Service Retiree Health Benefits Fund in the category
annual revisions to the national income and product           Retiree Health Care Funds beginning in 2007:Q2.
accounts from 2004 forward released by the Bureau of          Payments     to   the  new    postal   fund   affect  the
Economic Analysis (BEA) of the Department of                  miscellaneous liabilities of the federal government
Commerce      on  July   27,   2007,   and   subsequent       (tables F.106 and L.106) and miscellaneous assets of
information for 2007:Q2 released on August 30, 2007.          federal government retirement funds (tables F.120 and
The August 2007 issue of the Survey of Current                L.120).
Business details the major features of the annual
revision of the national income and product accounts.         Explanatory notes for tables D.1, D.2, and D.3.
                                                              Domestic debt comprises credit market funds borrowed
3.       Data for investment and depreciation flows of        by U.S. entities from both domestic and foreign
all sectors, and capital stocks for the household,            sources,   while   foreign    debt  represents   amounts
nonfarm nonfinancial corporate business, and nonfarm          borrowed by foreign financial and nonfinancial entities
noncorporate    business  sectors   have  been   revised      in U.S. markets only.     Financial sectors    consist of
beginning in 2004 to reflect updated annual estimates of      government-sponsored enterprises, agency- and GSE-
fixed assets from the BEA.                                    backed     mortgage    pools,    and   private   financial
                                                              institutions.   Credit market debt consists of debt
4.       Revisions to the rest of the world sector (tables    securities, mortgages, bank loans, commercial paper,
F.107 and L.107) reflect new estimates of the balance         consumer credit, U.S. government loans, and other
of payments and the international investment position         loans and advances; it excludes trade debt, loans for the
from the BEA for 1997 through 2006.            The new        purpose of carrying securities, and funds raised from
estimates are detailed in the July 2007 issue of the          equity sources.

Survey of Current Business.
                                                                        Growth rates in table D.1 are calculated by
5.       The rest of the world sector (tables F.107 and       dividing seasonally adjusted flows from table D.2 by
L.107) was modified to include two additional asset           seasonally adjusted levels at the end of the previous
categories, money market mutual fund shares and               period from table D.3. Seasonally adjusted levels in
mutual fund shares.                                           flow of funds statistics are derived by carrying forward
                                                              year-end levels by seasonally adjusted flows. Growth
6.       The property-casualty insurance companies            rates calculated from changes in unadjusted levels
sector  (tables F.116 and L.116) was modified to              printed in table L.2 can differ from those in table D.1.
include an additional asset category, mutual fund
shares.                                                       Relation of Flows to Outstandings.          Estimates of
                                                              financial assets and liabilities outstanding are linked to
                                                              data on flows.      However, figures on outstandings

2


contain discontinuities or breaks in series that could                          borrowed    through    the   financial    instrument    and
affect analysis of particular relationships over time.                          measured funds lent through that instrument. The size
Specifically, outstanding in the flow of funds accounts                         of such discrepancies relative to the main asset or
are related to the flows in the following way:                                  liability components is one indication of the quality of
                                                                                source data,  especially    on   an   annual    basis. For
Outstanding  t     = Outstanding   t-1    + Flow + Discontinuity
                                                   t                    t       quarterly data, differences in seasonal adjustment
                B
                  B
                                    B
                                           B
                                                     B
                                                       B
                                                                         B
                                                                           B




where "t" is the time period.                                                   procedures for financial and nonfinancial components
                                                                                of the accounts sometimes result in discrepancies that
          Discontinuities        result          from      changes     in       cancel in annual data.
valuation, breaks in source data, and changes in
definitions.       For  most    series,         the      value     of the       Availability of Data.    Flow    of funds statistics are
discontinuity is zero for nearly all time periods.                              updated about ten weeks following the end of a quarter.
However, in a few instances, the discontinuity is                               This publication -- the Z.1 release -- is available from
nonzero for almost all time periods, or is quite large in a                     the Board's Publications Services. Flow of funds data
particular quarter, such as a period when there is a                            are also available electronically through the Internet at
sharp increase or decrease in equity prices or a major                          the following location:
break in source data.

                                                                                http://www.federalreserve.gov/releases/Z1
          The discontinuities in a series can distort
estimated rates of growth in assets and liabilities                                       The Internet site also provides quarterly data
between    periods.           In order          to      minimize    these       beginning in 1952, organized in compressed files that
distortions, percentage changes in assets and liabilities                       correspond to the tables published in this release.
in flow of funds releases should be calculated as:                              There are files for quarterly data for seasonally adjusted
                                                                                flows, unadjusted flows, outstandings, balance sheets,
Percentage change = (Flow / Outstanding
                        t                 t                  t-1
                                                               ) * 100          and debt (tables D.1, D.2, and D.3).
                          B
                            B
                                         B
                                            B
                                                             B
                                                                  B




Preliminary Estimates.           Figures shown for the most                               A Guide to the Flow of Funds Accounts
recent quarter in these tables are based on preliminary                         is available. The 1,200-page Guide, published in two
and   incomplete information.                  A summary list of the            volumes in January 2000, explains in detail how the
principal sources of information available when the                             U.S. financial accounts are prepared and the principles
latest quarter's data were compiled is provided in a table                      underlying the accounts. The Guide can be purchased
following this introduction.                 The distinction between            for $20.00 from the Board's Publications Services.
"available" data and "missing" data is not between final                        Publications Services accepts orders accompanied by
and preliminary versions of data, but rather between                            checks as well as credit card orders.
those source estimates that are fully ready when the
latest quarterly publication is compiled and those that                                   The Internet site for this release at the location
are not yet completed.          However, the items that are                     shown above contains a link to an order form for the
shown as available are, in general, also preliminary in                         Guide that can be mailed or faxed to Publications
the sense that they are subject to revision by source                           Services. In addition, the Internet site includes a link to
agencies.                                                                       the Guide's descriptions of the tables in the flow of
                                                                                funds accounts.
Margins of Uncertainty. Flow of funds statistics are
subject to uncertainties resulting from measurement                             Subscription Information.          The Federal Reserve
errors in source data, incompatibilities among data from                        Board    charges  for  subscriptions     to  all statistical
different sources, potential revisions in both financial                        releases. Inquiries for releases should be directed to:
and nonfinancial series, and incomplete data in parts of
the accounts. The size of these uncertainties cannot be                                     Publications Services, Stop 127
quantified in precise statistical terms, but allowance for                                        Board of Governors
them is explicitly made throughout the accounts by the                                      of the Federal Reserve System
inclusion of "discrepancies" for various sectors and                                  20th Street and Constitution Avenue, N.W.
instrument types.          A discrepancy for a sector is the                                    Washington, DC 20551
difference between its measured sources of funds and                                                (202) 452-3244
its measured uses of funds. For an instrument category,
a discrepancy is the difference between measured funds

                                                                                                                 3



                          Availability of Data for Latest Quarter



                                   Available at time of publication            Major items missing
                                                                       U
                                                                                U
                                                                                                      U
                                   U




1. National income and              Preliminary estimates, seasonally          Unadjusted flows since 2006.
   product accounts (NIPA)          adjusted, for 2007:Q2.

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 2007:Q2. 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 2007:Q2;            2005.
   (tables F.102 and L.102)         Internal Revenue Service Statistics of
                                    Income (IRS/SOI) preliminary data
                                    through 2005; securities offerings,
                                    mortgages, bank loans, commercial
                                    paper, and other loans through
                                    2007:Q2.

4. Nonfarm noncorporate             IRS/SOI data through 2004; bank and           Statistics of Income data since
   business                         finance company loans and mortgage            2004.
   (tables F.103 and L.103)         borrowing through 2007:Q2.

5. Farm business                    Mortgages, bank loans, loans from             Consumption of fixed capital
   (tables F.104 and L.104)         government-sponsored enterprises,             and undistributed profits since
                                    U.S. government loans to farms, and           2006.
                                    equity in government-sponsored
                                    enterprises through 2007:Q2; data for
                                    checkable deposits and currency and
                                    trade payables through 2006.


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 2004:Q2.
                                    and nonmarketable U.S. government
                                    security issues through 2007:Q2; total
                                    financial assets through 2004:Q2 from
                                    the Census Bureau; breakdown of
                                    financial assets through 2004:Q2 from
                                    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 2007:Q2; Treasury data for
                                    loan programs through 2007:Q2.

4


 8. Rest of the world                 Balance of payments data; NIPA           None.
    (U.S. international               estimates; data from bank Reports of
     transactions)                    Condition and from Treasury
    (tables F.107 and L.107)          International Capital System through
                                      2007:Q2.


 9.  Monetary authority               All data through 2007:Q2.                None.
     (tables F.108 and L.108)


 10. Commercial banking               All data through 2007:Q2 for             Data since 2006 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 2007:Q2.                None.
    (tables F.114 and L.114)

 12. Credit unions                    All data through 2007:Q2.                None.
    (tables F.115 and L.115)

 13. Property-casualty insurance      All data through 2007:Q1; preliminary    Final data for 2007:Q2.
     companies                        data for 2007:Q2
    (tables F.116 and L.116)

 14. Life insurance companies         All data through 2007:Q1; preliminary    Final data for 2007:Q2.
    (tables F.117 and L.117)          data for 2007:Q2

 15. Private pension funds            Quarterly data through 2007:Q2;          Form 5500 data since 2004.
    (tables F.118 and L.118)          Internal Revenue Service/Department
                                      of Labor/Pension Benefit Guaranty
                                      Corporation Form 5500 data through
                                      2004.

 16. State and local government       Financial assets through 2007:Q1 from    Data for 2007:Q2.
    employee retirement funds         the Census Bureau.
    (tables F.119 and L.119)

 17. Federal government retirement    Data from the Monthly Treasury           None.
    funds                             Statement, the Thrift Savings Plan, and
    (tables F.120 and L.120)          the National Railroad Retirement
                                      Investment Trust through 2007:Q2.

 18. Money market mutual              All data through 2007:Q2.                None.
    funds
    (tables F.121 and L.121)


 19. Mutual funds                     All data through 2007:Q2.                None.
    (tables F.122 and L.122)



 20. Closed-end funds                 All data through 2007:Q2.                None.
    (tables F.123 and L.123)

                                                                                                           5



21. Exchange-traded funds       All data through 2007:Q2.                   None.
    (tables F.123 and L.123)

22. Government-sponsored        Data for Freddie Mac, FHLBs, Farmer         Fannie Mae's 10-Q since
   enterprises                  Mac, FCS, FICO and REFCORP                  2006:Q4.
   (tables F.124 and L.124)     through 2007:Q2. Data for Fannie Mae
                                through 2006.

23. Agency- and GSE-backed      All data through 2007:Q2.                   None.
   mortgage pools
   (tables F.125 and L.125)

24. Issuers of asset-backed     All data for private mortgage pools,        None.
   securities (ABSs)            consumer credit, business loans,
   (tables F.126 and L.126)     student loans, consumer leases, and
                                trade credit securitization through
                                2007:Q2.

25. Finance companies           All data through 2007:Q2.                   None.
   (tables F.127 and L.127)

26. Real estate investment      Data from SNL REIT DataSource               None.
   trusts (REITs)               through 2007:Q2.
   (tables F.128 and L.128)

27. Security brokers and        Data for firms filing FOCUS and
   dealers                      FOGS reports through 2007:Q2.
   (tables F.129 and L.129)

28. Funding corporations        Estimates for this sector are largely residuals and are derived from data for
   (tables F.130 and L.130)     other sectors.

