The Federal Reserve Flow of Funds report, Thursday, quantified a fall in household net worth of almost 5% to a total of just under $57 trillion, a fall of $2.8 trillion. Home mortgage debt in the third quarter fell a record breaking 2 and a half percentage points, the largest decline in available record.

The report successfully quantifies the state of consumer panic and the reduction of available credit across the market, showing significant declines in almost every important metric.

Analysts estimate another 5-10% drop in household wealth this upcoming quarter, observing the assumption that home prices continue to drop at the rapid rate they did in the third quarter.

“State and local government debt,” the report states, “increased at an annual rate of 3 percent in the third quarter, about 2 percentage points faster than in the previous quarter.” Federal government debt saw a much more significant increase, at an annual extrapolation of 39.25 percent this quarter, the “largest quarterly growth rate recorded in the flow of funds accounts.”

Overall, non-financial debt rose 7.2% in the third quarter.

The Fed changed procedure for analyzing home prices and adjusted all calculations to 2000 appropriately.

The Flow of Funds account has been published each quarter since 1952.

The December 11th Flow of Funds report can be downloaded from the Federal Reserve’s website.

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