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Fed Data Notes: Turmoil Swept US Economy

Numbers from the Fed today demonstrated the turmoil that swept our ecoomy in the third quarter.

And while some people have tried to compare the status quo to the early 1990s or the 1970s, some of the readings are without precedent.

Overall net mortgage origination fell off a cliff, contracting by over $300 billion on an annualized basis. That means the amount of new loans created fell below the quantity of debt charged off by banks and paid off in the normal amortization process.

The last two quarters mark only the second time in post war era that home borrowing actually fell.

Businesses are also cutting back—they reduced their trade accounts payable by the biggest amount ever as they scaled back on business.

Moody’s chief economist John Lonski said it was an example of how pain in the credit market flows through to ordinary economic activity while households and businesses were develevering, the federal government was borrowing at a jaw-dropping clip—its overall debt load rose a staggering 39 percent on an seasonally adjusted yearly basis.

The good news is that we’re relying less on the kindness of strangers less to cover the bill. U.S. money market funds absorbed a record 608 billion of the debt, and foreigners shrank to less than 40 percent of the market.

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