                                                                     For use at 12:00 p.m., eastern time
                                                                                              Thursday
                                                                                       March 12, 2009




FEDERAL RESERVE statistical release


Z.1




Flow of Funds Accounts
of the United States

Flows and Outstandings
Fourth Quarter 2008




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




                                            Fourth Quarter 2008

         Debt of the domestic nonfinancial sectors is         over 8 percentage points less than in the previous
estimated to have expanded at a seasonally adjusted           year.
annual rate of 6 percent in the fourth quarter of 2008,
almost 2 percentage points less than in the previous                    State and local government debt increased at
quarter. The deceleration was evident in all sectors.         an annual rate of 1 percent last quarter, and expanded
For 2008 as a whole, domestic nonfinancial debt rose          2 percent over all of 2008. Federal government debt
5 percent, about 2 percentage points below the 2007         surged at an annual rate of 37 percent in the fourth
pace.                                                         quarter, similar to the third-quarter pace. In 2008,
                                                              federal government debt rose more than 24 percent,
         Household debt contracted at an annual rate of       after a 5 percent increase in 2007.
2 percent in the fourth quarter, following two quarters
of very weak growth. In the fourth quarter, home                        At the end of the fourth quarter of 2008, the
mortgage debt decreased at an annual rate of 1               level of domestic nonfinancial debt outstanding was
percent, while consumer credit decreased at an annual         $33.5 trillion; household debt was $13.8 trillion,
rate of 3 percent. In 2008, household debt increased         nonfinancial business debt was $11.1 trillion, and total
 percent, 6 percentage points less than in the              government debt was $8.6 trillion.
previous year.
                                                                        Household net worth--the difference between
         Nonfinancial business debt rose at an annual         the value of assets and liabilities--was an estimated
rate of 1 percent in the fourth quarter, 2 percentage       $51.5 trillion at the end of the fourth quarter of 2008,
points less than in the previous quarter. The slowdown        $5.1 trillion dollars less than in the preceding quarter.
was concentrated in commercial paper, loans, and              For 2008 as a whole, household net worth fell $11.2
commercial mortgage borrowing. The 4 percent                 trillion.
increase in nonfinancial business debt in 2008 was


Growth of Domestic Nonfinancial Debt1
                                           P   P



Percentage changes; quarterly data are seasonally adjusted annual rates

                            Total           Households       Business             State and
                                                                                 local govts.            Federal

 1999                        6.4                  8.4          10.8                  3.3                  -1.9
 2000                        5.0                  9.1           9.3                  1.4                  -8.0
 2001                        6.3                  9.6           5.8                  8.8                  -0.2
 2002                        7.3                 10.8           2.6                11.1                    7.6
 2003                        8.1                 11.6           2.5                  8.3                 10.9

 2004                        8.9                 11.2           6.2                  7.4                  9.0
 2005                        9.5                 11.1           8.7                10.2                    7.0
 2006                        8.9                 10.0          10.5                  8.2                   3.9
 2007                        8.6                  6.6          13.1                  9.3                  4.9
 2008                        5.8                  0.4           4.8                  2.2                 24.2

 2007:Q1                     8.1                  7.0          10.5                10.9                    5.5
        Q2                   8.1                  7.2          12.9                10.0                    0.3
        Q3                   9.1                  5.9          14.3                  7.2                  8.0
        Q4                   8.0                  5.6          12.4                  7.7                  5.3

 2008:Q1                     5.2                  3.0           7.2                  3.5                  8.1
        Q2                   3.1                  0.3           5.8                  0.9                   5.9
        Q3                   8.1                  0.2           4.1                  3.1                 39.2
        Q4                   6.3                 -2.0           1.7                  1.2                 37.0
1. Changes shown are on an end-of-period basis.

                                              Table of Contents


Title                                                                           Table     Page


Flow of Funds Accounts, Fourth Quarter 2008                                                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 2008                                             114                115

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




                       Flow of Funds Accounts, Fourth Quarter 2008

          This publication presents the flow of funds       bonds. Data for corporate bonds begin in 1984:Q1.
accounts for 2008:Q4.                                       Estimates of checkable deposits and time and savings
                                                            deposits have been revised from 1945 forward to reflect
Data revisions and other changes. The statistics in         new information available on the Domestic Finance
the attached tables reflect the use of new or revised       Company Report of Consolidated Assets and Liabilities
source data. Most significant revisions appear in recent    (FR2248).
quarters; however, new source information resulted in
changes to data for earlier periods.                        7.    The funding corporation sector (table F.130) was
                                                            modified to include an additional liability category,
1.    Assets of the nonfarm nonfinancial corporate          corporate equities, reflecting American International
business sector (tables F.102 and L.102) were revised       Group's (AIG) issuance of preferred shares to the
from 2006:Q1 onward to reflect final data from the          federal government in 2008:Q4 under the TARP.
Internal Revenue Service (IRS) Statistics of Income
(SOI) for 2006.                                             8.    The market value of real estate (tables B.100,
                                                            B.102, and B.103) has been revised from 2004:Q4
2.    The federal government sector (tables F.106,          forward due to a shift from using the NCREIF
L.106, F.106.c, and L.106.c) was modified to include        appraisal-based commercial and multi-family indexes to
an additional asset category, corporate equities,           transaction-based indexes.
reflecting the federal government's purchase of
preferred shares issued by financial corporations under     Explanatory notes for tables D.1, D.2, and D.3.
the Troubled Assets Relief Program (TARP) and by            Domestic debt comprises credit market funds borrowed
government-sponsored enterprises (GSEs). In addition,       by U.S. entities from both domestic and foreign
on F.106, net capital transfers (line 20) was adjusted to   sources, while foreign debt represents amounts
remove what the Bureau of Economic Analysis (BEA)           borrowed by foreign financial and nonfinancial entities
assumed was the implied subsidy cost of capital             in U.S. markets only. Financial sectors consist of
injections   to  distressed businesses where the            government-sponsored enterprises, agency- and GSE-
government acquired assets in 2008:Q4. On L.106, the        backed mortgage pools, and private financial
value of corporate equities excludes this implied           institutions.   Credit market debt consists of debt
subsidy.                                                    securities, mortgages, bank loans, commercial paper,
                                                            consumer credit, U.S. government loans, and other
3.     The monetary authority sector (tables F.108 and      loans and advances; it excludes trade debt, loans for the
L.108) has been expanded to show new asset detail for       purpose of carrying securities, and funds raised from
bank loans n.e.c. related to the creation of Maiden Lane    equity sources.
II LLC, Maiden Lane III LLC, and Commercial Paper
Funding Facility LLC (CPFF).                                          Growth rates in table D.1 are calculated by
                                                            dividing seasonally adjusted flows from table D.2 by
4.    For the private pension fund sector (tables F.118,    seasonally adjusted levels at the end of the previous
F.118.b, F.118.c, L.118, L.118.b, and L.118.c),             period from table D.3. Seasonally adjusted levels in
estimates have been revised from 2006:Q1 onward to          flow of funds statistics are derived by carrying forward
reflect new data from the U.S. Internal Revenue             year-end levels by seasonally adjusted flows. Growth
Service/Department of Labor/Pension Benefit Guaranty        rates calculated from changes in unadjusted levels
Corporation Form 5500 filed for plan year 2006.             printed in table L.2 can differ from those in table D.1.

5.    The government-sponsored enterprises sector           Relation of Flows to Outstandings. Estimates of
(table F.124) was modified to include an additional         financial assets and liabilities outstanding are linked to
liability category, corporate equities.                     data on flows.      However, figures on outstandings
                                                            contain discontinuities or breaks in series that could
6.    The finance companies sector (tables F.127 and        affect analysis of particular relationships over time.
L.127) was modified to include two additional asset         Specifically, outstanding in the flow of funds accounts
categories, time and savings deposits and corporate         are related to the flows in the following way:

2


Outstanding = Outstanding + Flow + Discontinuity
             t                                                     source data, especially on an annual basis. For
             B B              t-1
                              B     B      t
                                           B B              t
                                                            B B


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

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



                                                                   and debt (tables D.1, D.2, and D.3). This data is also
Preliminary Estimates. Figures shown for the most                  available as a customizable download dataset through
recent quarter in these tables are based on preliminary            the Data Download Program (DDP) at the following
and incomplete information. A summary list of the                  location:
principal sources of information available when the
latest quarter's data were compiled is provided in a table         www.federalreserve.gov/datadownload/Choose.aspx?rel=Z.1
following this introduction. The distinction between
"available" data and "missing" data is not between final                    A Guide to the Flow of Funds Accounts           is
and preliminary versions of data, but rather between               available. The 1,200-page Guide, published in two
those source estimates that are fully ready when the               volumes in January 2000, explains in detail how the
latest quarterly publication is compiled and those that            U.S. financial accounts are prepared and the principles
are not yet completed. However, the items that are                 underlying the accounts. The Guide can be purchased
shown as available are, in general, also preliminary in            for $20.00 from the Board's Publications Services.
the sense that they are subject to revision by source              Publications Services accepts orders accompanied by
agencies.                                                          checks as well as credit card orders.

Margins of Uncertainty. Flow of funds statistics are                        The Internet site for this release at the location
subject to uncertainties resulting from measurement                shown above contains a link to an order form for the
errors in source data, incompatibilities among data from           Guide that can be mailed or faxed to Publications
different sources, potential revisions in both financial           Services. In addition, the Internet site includes a link to
and nonfinancial series, and incomplete data in parts of           the Guide's descriptions of the tables in the flow of
the accounts. The size of these uncertainties cannot be            funds accounts.
quantified in precise statistical terms, but allowance for
them is explicitly made throughout the accounts by the            Subscription Information.          The Federal Reserve
inclusion of "discrepancies" for various sectors and               Board charges for subscriptions to all statistical
instrument types. A discrepancy for a sector is the                releases. Inquiries for releases should be directed to:
difference between its measured sources of funds and
its measured uses of funds. For an instrument category,                        Publications Services, Stop 127
a discrepancy is the difference between measured funds                               Board of Governors
borrowed through the financial instrument and                                  of the Federal Reserve System
measured funds lent through that instrument. The size                   20th Street and Constitution Avenue, N.W.
of such discrepancies relative to the main asset or                                Washington, DC 20551
liability components is one indication of the quality of                                (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 2007 for
   product accounts (NIPA)          adjusted, for 2008:Q4.                       the government sectors.
                                                                                 Unadjusted flows since 2006 for
                                                                                 all other sectors.

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 2008:Q4. 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 2008:Q3;             2006. QFR since 2008:Q3.
   (tables F.102 and L.102)         Internal Revenue Service Statistics of
                                    Income (IRS/SOI) final data through
                                    2006; securities offerings, mortgages,
                                    bank loans, commercial paper, and
                                    other loans through 2008:Q4.

4. Nonfarm noncorporate             IRS/SOI data through 2006; bank and            Statistics of Income data since
   business                         finance company loans and mortgage             2006.
   (tables F.103 and L.103)         borrowing through 2008:Q4.

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            2007.
                                    equity in government-sponsored
                                    enterprises through 2008:Q4;
                                    preliminary data for checkable deposits
                                    and currency and trade payables
                                    through 2007.
6. State and local governments      Gross offerings and retirements of             Total financial assets since
   (tables F.105 and L.105)         municipal securities, deposits at banks,       2006:Q2 and selected financial
                                    and nonmarketable U.S. government              asset detail since 2004:Q2.
                                    security issues through 2008:Q4; total
                                    financial assets through 2006: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 and
                                    Treasury data for loan programs and
                                    the Troubled Assets Relief Program
                                    (TARP) through 2008:Q4.

4


 8. Rest of the world              Balance of payments data through       Balance of payments data for
    (U.S. international            2008:Q3. NIPA estimates; data from     2008:Q4.
    transactions)                  bank Reports of Condition and from
    (tables F.107 and L.107)       Treasury International Capital System
                                   through 2008:Q4.


 9. Monetary authority             All data through 2008:Q4.              None.
    (tables F.108 and L.108)


10. Commercial banking             All data through 2008:Q4 for           Data since 2007 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 2008:Q4.              None.
    (tables F.114 and L.114)

12. Credit unions                  All data through 2008:Q4.              None.
    (tables F.115 and L.115)

13. Property-casualty insurance    All data through 2008:Q3.              Data for 2008:Q4.
    companies
    (tables F.116 and L.116)

14. Life insurance companies       All data through 2008:Q3.              Data for 2008:Q4.
    (tables F.117 and L.117)

15. Private pension funds          Quarterly data through 2008:Q4;        Form 5500 data since 2006.
    (tables F.118 and L.118)       Internal Revenue Service/Department
                                   of Labor/Pension Benefit Guaranty
                                   Corporation Form 5500 data through
                                   2006.

16. State and local government     Detailed data through 2006:Q2 from     Detailed data since 2006:Q2 and
    employee retirement funds      the Census Bureau; sample data         sample data for 2008:Q4.
    (tables F.119 and L.119)       through 2008:Q3 from the Census
                                   Bureau.
17. Federal government retirement  Data from the Monthly Treasury         None.
    funds                          Statement of Receipts and Outlays, the
    (tables F.120 and L.120)       Thrift Savings Plan, and the National
                                   Railroad Retirement Investment Trust
                                   through 2008:Q4.
18. Money market mutual            All data through 2008:Q4.              None.
    funds
    (tables F.121 and L.121)

19. Mutual funds                   All data through 2008:Q4.              None.
    (tables F.122 and L.122)


20. Closed-end funds               All data through 2008:Q4.              None.
    (tables F.123 and L.123)

21. Exchange-traded funds          All data through 2008:Q4.              None.
    (tables F.123 and L.123)

                                                                                                             5

22. Government-sponsored        Data for Fannie Mae, FICO, FCS, and         Data for Freddie Mac, FHLBs,
    enterprises                 REFCORP through 2008:Q4 and for             and Farmer Mac since 2008:Q3.
    (tables F.124 and L.124)    Freddie Mac, FHLBs, and Farmer Mac
                                through 2008:Q3.

23. Agency- and GSE-backed      Data for Fannie Mae and Ginnie Mae          Data for Freddie Mac since
    mortgage pools              through 2008:Q4 and for Freddie Mac         2008:Q3.
    (tables F.125 and L.125)    through 2008:Q3.

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
                                2008:Q4.

25. Finance companies           All data through 2008:Q4.                   None.
    (tables F.127 and L.127)

26. Real estate investment      Data from SNL REIT DataSource               None.
    trusts (REITs)              through 2008:Q4.
    (tables F.128 and L.128)

27. Security brokers and        Data for firms filing FOCUS and             None.

    dealers                     FOGS reports through 2008:Q4.
    (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.

