                                                                     For use at 12:00 p.m., eastern time
                                                                                              Thursday
                                                                                     December 7, 2006




FEDERAL RESERVE statistical release


Z.1




Flow of Funds Accounts
of the United States

Flows and Outstandings
Third Quarter 2006




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




                                                Third Quarter 2006


         Debt of the domestic nonfinancial sectors                      State and local government debt rose at an
expanded at a seasonally adjusted annual rate of 6-3/4        annual rate of 9-1/4 percent in the third quarter, nearly
percent in the third quarter of 2006--the same as the         3 percentage points faster than in the previous quarter.
previous quarter's pace. In the third quarter, borrowing      The    third-quarter acceleration  of   municipal   debt
declined for the household and business sectors and           reflected a pickup in net issuance for capital projects
increased for the government sectors.                         and advance refundings. In the third quarter of 2006,
                                                              federal government debt rose at a seasonally adjusted
         Household debt expanded at an annual rate of         annual rate of 3-1/4 percent, following a 2-1/2 percent
6-3/4 percent in the third quarter of 2006, significantly     contraction in the previous quarter.
less rapidly than in the previous quarter. Last quarter,
growth of home mortgage debt fell to a rate of 7-1/4                    At the end of the third quarter of 2006, the
percent--its slowest pace since the late 1990s--while         level of domestic nonfinancial debt outstanding was
consumer credit grew moderately. In the third quarter,        $28.2 trillion.   Household debt amounted to $12.6
nonfinancial business debt rose at a 7-3/4 percent pace,      trillion, and nonfinancial business debt was $8.8
about 3/4 percentage point less than the rate in the          trillion. Combined, state and local governments and the
second quarter. The deceleration of business debt last        federal government had outstanding debt of $6.8
quarter mainly reflected reduced borrowing in the bond        trillion.
and commercial paper markets.




Growth of Domestic Nonfinancial Debt1
                                           P
                                               P




Percentage changes; quarterly data are seasonally adjusted annual rates
                                                                                 State and
                           Total            Households       Business                                   Federal
                                                                                local govts.
 1996                        5.2                  6.7           6.2                -1.5                   4.0
 1997                        5.3                  5.9           9.0                4.3                    0.6
 1998                        6.8                  7.8          12.3                6.3                   -1.4
 1999                        6.4                  8.4          10.6                3.4                   -1.9
 2000                        4.9                  9.1           9.2                1.3                   -8.0

 2001                        6.3                  9.3           6.0                8.8                   -0.2
 2002                        7.2                 10.6           2.5               11.0                    7.6
 2003                        8.2                 11.6           2.7                8.3                   10.9
 2004                        9.0                 11.6           5.9                7.4                    9.0
 2005                        9.5                 11.7           7.8               10.2                    7.0

 2005:Q1                     9.2                  9.6           6.5                9.9                   13.0
       Q2                    8.2                 11.9           7.8                7.3                    0.6
       Q3                    9.7                 11.9           8.2               12.3                    5.8
       Q4                    9.6                 11.6           7.7                9.7                    8.0

 2006:Q1                     9.5                  9.7           9.6                3.5                   11.3
       Q2                    6.7                  9.2           8.4                6.6                   -2.4
       Q3                    6.7                  6.8           7.7                9.3                    3.3
1. Changes shown are on an end-of-period basis.

                                              Table of Contents



Title                                                                            Table     Page



Flow of Funds Accounts, Third Quarter 2006                                                  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 2005                                             114                115

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




                          Flow of Funds Accounts, Third Quarter 2006

          This publication presents the flow of funds                            Discontinuities      result    from   changes      in
accounts for 2006:Q3.                                                  valuation, breaks in source data, and changes in
                                                                       definitions.   For   most      series,  the   value      of the
Data revisions and other changes. The statistics in                    discontinuity is zero for nearly all time periods.
the attached tables reflect the use of new or revised                  However, in a few instances, the discontinuity is
source data. Most significant revisions appear in recent               nonzero for almost all time periods, or is quite large in a
quarters; however, new source information resulted in                  particular quarter, such as a period when there is a
changes to data for earlier periods.              In this release,     sharp increase or decrease in equity prices or a major
assets of the private pension fund sector (tables F.118,               break in source data.
F.118.b, F.118.c and L.118, L.118.b, L.118.c) were
revised to reflect new data from the Department of                               The discontinuities in a series can distort
Labor's Form 5500 for plan year 2003.                                  estimated rates of growth in assets and liabilities
                                                                       between    periods.        In  order    to  minimize      these
Explanatory notes for tables D.1, D.2, and D.3.                        distortions, percentage changes in assets and liabilities
Domestic debt comprises credit market funds borrowed                   in flow of funds releases should be calculated as:
by U.S. entities from both domestic and foreign
sources,   while     foreign   debt      represents      amounts       Percentage change    t    = (Flow / Outstanding
                                                                                                          t                t-1
                                                                                                                             ) * 100
                                                                                              B
                                                                                                B
                                                                                                         B
                                                                                                           B
                                                                                                                          B
                                                                                                                               B




borrowed by foreign financial and nonfinancial entities
in U.S. markets only. Financial sectors consist of                     Preliminary Estimates.         Figures shown for the most
government-sponsored enterprises, agency- and GSE-                     recent quarter in these tables are based on preliminary
backed    mortgage       pools,        and private      financial      and   incomplete    information.       A summary list of the
institutions.      Credit market debt consists of debt                 principal sources of information available when the
securities, mortgages, bank loans, commercial paper,                   latest quarter's data were compiled is provided in a table
consumer credit, U.S. government loans, and other                      following this introduction.         The distinction between
loans and advances; it excludes trade debt, loans for the              "available" data and "missing" data is not between final
purpose of carrying securities, and funds raised from                  and preliminary versions of data, but rather between
equity sources.                                                        those source estimates that are fully ready when the
                                                                       latest quarterly publication is compiled and those that
          Growth rates in table D.1 are calculated by                  are not yet completed.        However, the items that are
dividing seasonally adjusted flows from table D.2 by                   shown as available are, in general, also preliminary in
seasonally adjusted levels at the end of the previous                  the sense that they are subject to revision by source
period from table D.3. Seasonally adjusted levels in                   agencies.
flow of funds statistics are derived by carrying forward
year-end levels by seasonally adjusted flows. Growth                   Margins of Uncertainty. Flow of funds statistics are
rates calculated from changes in unadjusted levels                     subject to uncertainties resulting from measurement
printed in table L.2 can differ from those in table D.1.               errors in source data, incompatibilities among data from
                                                                       different sources, potential revisions in both financial
Relation of Flows to Outstandings.                  Estimates of       and nonfinancial series, and incomplete data in parts of
financial assets and liabilities outstanding are linked to             the accounts. The size of these uncertainties cannot be
data on flows.        However, figures on outstandings                 quantified in precise statistical terms, but allowance for
contain discontinuities or breaks in series that could                 them is explicitly made throughout the accounts by the
affect analysis of particular relationships over time                  inclusion of "discrepancies" for various sectors and
specifically, outstanding in the flow of funds accounts                instrument types.       A discrepancy for a sector is the
are related to the flows in the following way:                         difference between its measured sources of funds and
                                                                       its measured uses of funds. For an instrument category,
Outstanding                                                            a discrepancy is the difference between measured funds
             t    = Outstandingt-1 + Flow + Discontinuity
                                             t                  t
                 B
                                      B
                                                B
                                                                  B
               B
                                 B
                                              B
                                                                B




where "t" is the time period.                                          borrowed    through        the  financial   instrument     and
                                                                       measured funds lent through that instrument. The size
                                                                       of such discrepancies relative to the main asset or

2


 liability components is one indication of the quality of               A Guide to the Flow of Funds Accounts
 source data,   especially   on   an  annual   basis.  For     is available. The 1,200-page Guide, published in two
 quarterly data, differences in seasonal adjustment            volumes in January 2000, explains in detail how the
 procedures for financial and nonfinancial components          U.S. financial accounts are prepared and the principles
 of the accounts sometimes result in discrepancies that        underlying the accounts. The Guide can be purchased
 cancel in annual data.                                        for $20.00 from the Board's Publications Services.
                                                               Publications Services accepts orders accompanied by
 Availability of Data.    Flow   of funds statistics are       checks as well as credit card orders.
 updated about ten weeks following the end of a quarter.
 This publication -- the Z.1 release -- is available from               The Internet site for this release at the location
 the Board's Publications Services. Flow of funds data         shown above contains a link to an order form for the
 are also available electronically through the Internet at     Guide that can be mailed or faxed to Publications
 the following location:                                       Services. In addition, the Internet site includes a link to
                                                               the Guide's descriptions of the tables in the flow of
 http://www.federalreserve.gov/releases/Z1                     funds accounts.

           The Internet site also provides quarterly data      Subscription Information.         The Federal Reserve
 beginning in 1952, organized in compressed files that         Board   charges  for   subscriptions    to  all  statistical
 correspond to the tables published in this release.           releases. Inquiries for releases should be directed to:
 There are files for quarterly data for seasonally adjusted
 flows, unadjusted flows, outstandings, balance sheets,                   Publications Services, Stop 127
 and debt (tables D.1, D.2, and D.3).                                           Board of Governors
                                                                           of the Federal Reserve System
                                                                    20th Street and Constitution Avenue, N.W.
                                                                              Washington, DC 20551
                                                                                  (202) 452-3244


                                                                                                                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 2005.
   product accounts (NIPA)         adjusted, for 2006: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 2006: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 2006:Q2;            2004.
   (tables F.102 and L.102)        Internal Revenue Service Statistics of
                                   Income (IRS/SOI) preliminary data
                                   through 2004; securities offerings,
                                   mortgages, bank loans, commercial
                                   paper, and other loans through
                                   2006:Q3.

4. Nonfarm noncorporate            IRS/SOI data through 2003; bank and           Statistics of Income data since
   business                        finance company loans and mortgage            2003.
   (tables F.103 and L.103)        borrowing through 2006:Q3.

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           2003.
                                   equity in government-sponsored
                                   enterprises through 2006:Q3;
                                   preliminary data for checkable deposits
                                   and currency and trade payables
                                   through 2005.

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 2006:Q3;
                                   selected financial assets through
                                   2004: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 2006:Q3; Treasury data for
                                   loan programs through 2006:Q3.

4


 8. Rest of the world                 Balance of payments data through         Balance of payments data for
    (U.S. international               2006:Q2; NIPA estimates; data from       2006:Q3.
    transactions)                     bank Reports of Condition and from
    (tables F.107 and L.107)          Treasury International Capital System
                                      through 2006:Q3.


 9. Monetary authority                All data through 2006:Q3.                None.
    (tables F.108 and L.108)


 10. Commercial banking               All data through 2006:Q3 for             Data since 2005 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 2006:Q3.                None.
    (tables F.114 and L.114)

 12. Credit unions                    All data through 2006:Q3.                None.
    (tables F.115 and L.115)

 13. Property-casualty insurance      All data through 2006:Q2.                Data for 2006:Q3.
     companies
    (tables F.116 and L.116)

 14. Life insurance companies         All data through 2006:Q2.                Data for 2006:Q3.
    (tables F.117 and L.117)

 15. Private pension funds            Quarterly data through 2006:Q3;          Form 5500 data since 2003.
    (tables F.118 and L.118)          Internal Revenue Service/Department
                                      of Labor/Pension Benefit Guaranty
                                      Corporation Form 5500 data through
                                      2003.

 16. State and local government       Selected financial assets through        Data for 2006:Q3.
    employee retirement funds         2006:Q2 from Census data and the
    (tables F.119 and L.119)          comprehensive annual financial reports
                                      of state and local pension funds.

 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 2006:Q3.

 18. Money market mutual              All data through 2006:Q3.                None.
    funds
    (tables F.121 and L.121)


 19. Mutual funds                     All data through 2006:Q3.                None.
    (tables F.122 and L.122)



 20. Closed-end funds                 All data through 2006:Q3.                None.
    (tables F.123 and L.123)

                                                                                                           5



21. Exchange-traded funds       All data through 2006:Q3.                   None.
    (tables F.123 and L.123)

22. Government-sponsored        Data for FHLBs, Farmer Mac, FCS,            Much of the source data for
    enterprises                 FICO and REFCORP through                    Fannie Mae beginning in
    (tables F.124 and L.124)    2006:Q3. Complete data for Fannie           2004:Q3 and for Freddie Mac
                                Mae through 2004:Q2 and for Freddie         beginning in 2005:Q3.
                                Mac through 2005:Q2.

23. Agency- and GSE-backed      All data through 2006:Q3.                   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
                                2006:Q3.

25. Finance companies           All data through 2006:Q3.                   None.
    (tables F.127 and L.127)

26. Real estate investment      Data from SNL REIT DataSource               None.
    trusts (REITs)              through 2006:Q3.
    (tables F.128 and L.128)

27. Security brokers and        Data for firms filing FOCUS and             None..
    dealers                     FOGS reports through 2006:Q3.
    (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.

