                                                                                                                             
                                                                                       For use at 12:00 p.m., eastern time 
                                                                                                                Thursday                            
                                                                                                       December 9, 2004 
    FEDERAL RESERVE statistical release 
                                                                  
 Z.1 
      Flow of Funds Accounts            
of the United States 
  Flows and Outstandings 
Third Quarter 2004 
             Board of Governors of the Federal Reserve System, Washington DC 20551 
     



  
                                                                 
                                          Flow of Funds Summary Statistics  
                                                    Third Quarter 2004 
                                                                           
               Domestic nonfinancial debt rose at a                                     Household debt expanded at an annual rate of  
seasonally adjusted annual rate of 7-1/2 percent in the                   9 percent in the third quarter, as mortgage debt grew at 
third quarter of 2004, up a bit from the 7 percent pace                   an 11-1/4 percent pace and consumer credit rose 6 
posted in the previous quarter.  The pickup in debt                       percent.  Debt of nonfinancial businesses increased at a 
growth reflected faster growth of nonfederal debt,                        5 percent annual rate in the third quarter, somewhat 
which was offset in large part by a substantial decline                   faster than in the previous quarter.  Among the 
in the growth of federal debt.                                            components of nonfinancial business borrowing, 
                                                                          commercial mortgages increased substantially in the 
               On a seasonally adjusted basis, federal debt               third quarter, and commercial paper outstanding and 
growth fell to an annual rate of 5 percent in the third                   bank loans continued to expand.   
quarter, less than half its pace earlier this year.  By                    
contrast, nonfederal debt expanded at an 8 percent                                      The seasonally adjusted level of domestic 
annual rate in the third quarter, up from a 6-1/4 percent                 nonfinancial debt outstanding was $23.6 trillion at the 
pace in the previous quarter.  The acceleration in                        end of the third quarter of 2004.  Debt of nonfederal 
nonfederal debt last quarter was broadly distributed                      sectors was $19.3 trillion and federal debt held by the 
across households, nonfinancial businesses, and state                     public was $4.3 trillion. 
and local governments.                                                                                                     
                                                                           
 Growth of Domestic Nonfinancial Debt1 
Percentage changes; quarterly data are seasonally adjusted annual rates 
 
                                                                                                  Nonfederal                                     
                                                                                                                                                 
       Total 
                                          Federal Total Households Business  State and 
                                                                                                                               local govts. 
      1994                   4.6 4.7                            4.6 7.6  3.8 -4.0 
                                                                                                                                                      
      1995 5.3 4.1                                              5.7 7.2  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 6.9 -1.4                                             9.6 8.0 12.3  6.3 
                                                                                                                                                      
                                                                                                                                                      
      1999 6.4 -1.9                                             8.9 8.3 10.6  3.4 
                                                                                                                                                      
      2000 4.8 -8.0                                             8.3 8.7  9.4  1.3 
                                                                                                                                                      
      2001 6.2 -0.2                                             7.6 8.9  6.1  8.9 
                                                                                                                                                      
      2002 6.8 7.6                                              6.7 9.6  2.6 11.1 
                                                                                                                                                      
      2003 8.1 10.9                                             7.5 10.0  4.3  8.2 
                                                                                                                                                      
                                                                                                                                                      
      2003: Q1               7.2            5.1                 7.7 11.0  4.0  6.9 
                                                                                                                                                      
                Q2          11.0           19.6                 9.1 11.5  5.9  11.3 
                                                                                                                                                      
                Q3           7.0            8.2                 6.8 9.4  3.5  7.2 
                                                                                                                                                      
                Q4           6.2            9.1                 5.5 6.8  3.7  6.3 
                                                                                                                                                      
                                                                                                                                                      
      2004: Q1               9.1           12.0                 8.5 11.4  4.6  9.5 
                                                                                                                                                      
                Q2           7.0           10.7                 6.2 8.5  3.6  4.0 
                                                                                                                                                      
                Q3           7.4            4.9                 8.0 9.1  5.1 14.2 
                                                                                                                                                      
      1.  Changes shown are on an end-of-period basis. 
  



 



                                                                                                                       
 
                                              Table of Contents 
                                                                                                                        
  Title                                                              
                                                                                          Table 
                                                                                                             Page 
   Flow of Funds Accounts, Third Quarter 2004                                                                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                             

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 2003                                                                          114                               115      

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

 



  



                                                                                                                                       1

                                                                                                                                   
                                                                       
                           Flow of Funds Accounts, Third Quarter 2004 
   
         This publication presents the flow of funds                       However, in a few instances, the discontinuity is 
accounts for 2004:Q3.                                                      nonzero for almost all time periods, or is quite large in a 
                                                                           particular quarter, such as a period when there is a 
Data revisions and other changes.  The statistics in                       sharp increase or decrease in equity prices or a major 
the attached tables reflect the use of new or revised                      break in source data. 
source data.  Most significant revisions appear in recent                   
quarters; however, new source information resulted in                                The discontinuities in a series can distort 
changes to data for earlier periods.  In this release, data                estimated rates of growth in assets and liabilities 
for the private pension funds sector (tables F.119,                        between periods.  In order to minimize these 
L.119, F.119b, F.119c, L.119b, and L.119c) have been                       distortions, percentage changes in assets and liabilities 
revised for the period 2000 forward to reflect statistics                  in flow of funds releases should be calculated as: 
from the U.S. Internal Revenue Service/Department of                        
Labor/Pension Benefit Guaranty Corporation Form                            Percentage change t = (Flow t / Outstanding t-1) * 100 
5500 filed for plan year 2000.                                              
                                                                           Preliminary Estimates.  Figures shown for the most 
Explanatory notes for tables D.1, D.2, and D.3.                            recent quarter in these tables are  based  on  preliminary 
Domestic debt comprises credit market funds borrowed                       and   incomplete   information.    A summary list of the  
by U.S. entities from both domestic and foreign                            principal  sources  of  information  available  when the  
sources, while foreign debt represents amounts                             latest quarter's data were compiled is provided in a table 
borrowed by foreign financial and nonfinancial entities                    following this introduction.  The distinction between 
in  U.S. markets  only.  Financial  sectors  consist of                    "available" data and "missing" data is not between final 
government-sponsored  enterprises,   agency- and GSE-                      and preliminary versions of data, but rather between 
backed mortgage pools, and private financial 
                                                                           those source estimates that  are  fully  ready  when  the  
institutions.  Credit market debt consists of debt                         latest quarterly publication is compiled and those that 
securities, mortgages, bank loans, commercial paper,                       are not yet completed.  However, the items that are 
consumer credit, U.S. government loans, and other                          shown as available are, in general, also preliminary in 
loans and advances; it excludes trade debt, loans for the                  the sense that they are subject to revision by source 
purpose of carrying securities, and funds raised from                      agencies. 
equity sources.                                                             
                                                                           Margins of Uncertainty.  Flow of funds statistics are 
         Growth rates in table D.1 are calculated by                       subject to uncertainties resulting from measurement 
dividing seasonally adjusted flows from table D.2 by                       errors in source data, incompatibilities among data from 
seasonally adjusted levels at the end of the previous                      different sources, potential revisions in both financial 
period from table D.3.  Seasonally adjusted levels in                      and nonfinancial series, and incomplete data in parts of 
flow of funds statistics are derived by carrying forward                   the accounts.  The size of these uncertainties cannot be 
year-end levels by seasonally adjusted flows.  Growth                      quantified in precise statistical terms, but allowance for  
rates calculated from changes in unadjusted levels                         them is explicitly made throughout the accounts by the 
printed in table L.2 can differ from those in table D.1.                   inclusion of "discrepancies" for various sectors and 
                                                                           instrument types.  A discrepancy for a sector is the 
Relation of Flows to Outstandings.  Estimates of                           difference between its measured sources of funds and 
financial assets and liabilities outstanding are linked to                 its measured uses of funds.  For an instrument category, 
data on flows.  However, figures on outstandings                           a discrepancy is the difference between measured funds 
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                                                                quarterly data, differences in seasonal adjustment 
                t = Outstanding t-1+ Flow t+ Discontinuity t 
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 



2 
 quarter. This publication - the Z.1 release - is            Publications Services accepts orders accompanied by 
available from the Board's Publications Services.  Flow      checks as well as credit card orders.   
of funds data are also available electronically through       
the Internet at the following location:                                The Internet site for this release at the location 
                                                             shown above contains a link to an order form for the 
      http://www.federalreserve.gov/releases/Z1              Guide that can be mailed or faxed to Publications 
                                                             Services.  In addition, the Internet site includes a link to 
          The Internet site also provides quarterly data     the Guide's descriptions of the tables in the flow of 
beginning in 1952, organized in compressed files that        funds accounts. 
correspond to the tables published in this release.           
There are files for quarterly data for seasonally            Subscription Information.  The Federal Reserve 
adjusted  flows, unadjusted flows, outstandings, balance     Board charges for subscriptions to all statistical 
sheets, and  debt (tables D.1, D.2, and D.3).                releases.  Inquiries for releases should be directed to: 
                                                              
 A 
            Guide to the Flow of Funds Accounts is                       Publications Services, Stop 127 
available.  The 1,200-page Guide, published in two                               Board of Governors 
volumes in January 2000, explains in detail how the                       of the Federal Reserve System 
U.S. financial accounts are prepared and the principles            20th Street and Constitution Avenue, N.W. 
underlying the accounts.  The Guide can be purchased                         Washington, DC  20551 
for $20.00 from the Board's Publications Services.                                 (202) 452-3244 



                                                                                                                                      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 2002. 
         product accounts (NIPA)                 adjusted, for 2004:Q3.  
                                                  
    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 2004:Q3.  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:Q2;               2002. 
         (tables F.102 and L.102)                Internal Revenue Service Statistics of 
                                                 Income (IRS/SOI) preliminary data 
                                                 through 2002; securities offerings, 
                                                 mortgages, bank loans, commercial 
                                                 paper, and other loans through 
                                                 2004:Q3. 
                                                                                                   
    4.  Nonfarm noncorporate                      IRS/SOI data through 2001; bank and             Statistics of Income data since 
         business                                finance company loans and mortgage               2001. 
         (tables F.103 and L.103)                borrowing through 2004:Q3. 
                                                                                                   
    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 2004:Q3;                      
                                                 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:Q3. 
                                                 and nonmarketable U.S. government 
                                                 security issues through 2004:Q3; 
                                                 selected financial assets through 
                                                 2003:Q3 from the comprehensive 
                                                 annual financial reports of state and 
                                                 local governments that account for 
                                                 most of the holdings of the sector, and 
                                                 data from Standard & Poor's on local 
                                                 government investment pools. 



4 

                                                                                                                                                              
                                                                                                               
      7.    Federal government                         Data from the Monthly Treasury                         None. 
             (tables F.106 and L.106)                         Statement of Receipts and Outlays 
                                                              through 2004:Q3; Treasury data for 
                                                              loan programs through 2004:Q3. 
       

       8.   Rest of the world                                 Balance of payments data through                Balance of payments data for 
             (U.S. international                              2004:Q2; NIPA estimates; data from              2004:Q3. 
             transactions)                                    bank Reports of Condition and 
             (tables F.107 and L.107)                         Treasury International Capital System 
                                                              through 2004:Q3. 

       9.   Monetary authority                                All data through 2004:Q3.                       None. 
             (tables F.108 and L.108) 

                                                                                                               
      10.  Commercial banking                                 All data through 2004:Q3 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 2004:Q3.                       None. 
             (tables F.114 and L.114) 
                                                                                                               
      12.  Credit unions                                      All data through 2004:Q3.                       None. 
             (tables F.115 and L.115) 
                                                                                                               
      13.  Bank personal trusts and                  All data through 2003:Q4; total assets                   Asset detail since 2003:Q4.  
             estates                                          through 2004:Q3.                                                                                     
             (tables F.116 and L.116)                                                                           
                                                                                                               
      14.  Life insurance companies                           All data through 2004:Q2.                       Data for 2004:Q3. 
             (tables F.117 and L.117)                                                                                                                             
                                                               
      15.  Other insurance companies                          All data through 2004:Q2.                       Data for 2004:Q3. 
             (tables F.118 and L.118)                                                                          
        16.   Private pension funds                           Quarterly data through 2004:Q3;                 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:Q1.                                  Data since 2004:Q1. 
             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 2004:Q3. 



                                                                                                                                          5 

                                                                                                     
     19.  Money market mutual                      All data through 2004:Q3.                        None. 
            funds 
            (tables F.122 and L.122) 

     20.  Mutual funds                                  All data through 2004:Q3.                   None. 
            (tables F.123 and L.123) 
      
     21.  Closed-end funds                              All data through 2004:Q3.                   None. 
            (tables F.124 and L.124) 
                                                                                                     
     22.  Exchange-traded funds                         All data through 2004:Q3.                   None. 
            (tables F.124 and L.124) 

     23.  Government-sponsored                    Data for FHLBs, FCS, Farmer Mac,                  Data after 2003:Q4 for Freddie 
            enterprises                                 Sallie Mae, FICO, and REFCORP               Mac; data after 2004:Q2 for 
            (tables F.125 and L.125)                    through 2004:Q3.                            Fannie Mae.  
                                                                                                     
     24.  Agency- and GSE-backed                        All data through 2004:Q3.                   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 
                                                        2004:Q3. 
                                                                                                     
     26.  Finance companies                             All data through 2004:Q3.                   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 2004:Q3. 
           (tables F.130 and L.130) 
                                                                                                     
     29.  Security brokers and                        Data for firms filing FOCUS and               None. 
            dealers                                     FOGS reports through 2004:Q3.  
            (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. 
 



