by Calculated Risk on 6/09/2005 08:22:00 PM

The Federal Reserve released their quarterly Flow of Funds report today for Q1 2005. The summary: America's debt binge continued.

Borrowing in the first quarter was at an all time high of $2.4 Trillion (annualized) for all sectors. That is double the quarterly borrowing of just 3 years ago.

The leading offenders by percentage debt growth (annualized): State and Local Governments at 16.2%, the Federal Government at 13.8% (2nd worst quarter in almost 20 years), and household home mortgages at 10.6% (down from 2004 levels).

The surprise is the surge in State and Local borrowing. The $271 Billion annualized rate of borrowing is almost double any quarter in the last few years.

With approximately $600 Billion in new debt in Q1 (reported as $2.4 Trillion annualized) and GDP growth of approximately $50B for Q1 (current dollars - see table 3) is the United States just buying growth with debt?