Domestic debt deleveraging continues

The Fed’s latest Financial Accounts release shows that total domestic credit market debt fell back to a 12-year low of 326% of GDP in the third quarter, from a peak of 370% in early 2009. Admittedly, non-financial corporate debt and Federal government debt have risen sharply in recent years, but those increases have been more than offset by the continued deleveraging by households, the financial sector and State & local governments.