For use at 12:00 p.m., eastern time
                                                                                              Thursday
                                                                                     December 8, 2005




FEDERAL RESERVE statistical release


Z.1




Flow of Funds Accounts
of the United States

Flows and Outstandings
Third Quarter 2005




Board of Governors of the Federal Reserve System, Washington DC 20551

                                 Flow of Funds Summary Statistics
                                             Third Quarter 2005

         Domestic nonfinancial debt rose at a                          In the third quarter, household debt rose at a
seasonally adjusted annual rate of 9 percent in the third     seasonally adjusted annual rate of 11-1/2 percent, a
quarter of 2005. Debt growth in the third quarter was a       touch more rapid than the previous quarter, reflecting a
percentage point faster than the second-quarter pace,         robust expansion of mortgage debt and a moderate
reflecting faster debt growth of the federal government,      increase in consumer credit. Meanwhile, growth of
state and local governments, and the household sector.        nonfinancial business debt was 7-1/2 percent in the
                                                              third quarter, about 1-3/4 percentage points below the
         On a seasonally adjusted basis, federal              second-quarter pace.     The slowing in nonfinancial
government debt expanded at an annual rate of 5               business borrowing in the third quarter was primarily
percent last quarter, after having been about unchanged       accounted for by a decrease in short-term borrowing.
in the second quarter. State and local government debt
expanded at an annual rate of 12-1/2 percent in the third              At the end of the third quarter of 2005, the
quarter, after having increased 6 percent in the second       seasonally adjusted level of domestic nonfinancial debt
quarter.                                                      outstanding was $25.7 trillion. Debt of the nonfederal
                                                              sectors was $21.1 trillion and federal debt held by the
                                                              public was $4.6 trillion.


Growth of Domestic Nonfinancial Debt1
Percentage changes; quarterly data are seasonally adjusted annual rates


                                                                             Nonfederal

                   Total           Federal               Total     Households        Business        State and
                                                                                                    local govts.
 1995               5.3              4.1                  5.7          7.1              7.2            -5.5
 1996               5.2              4.0                  5.7          6.7              6.2            -1.5
 1997               5.3              0.6                  7.0          5.9              9.0             4.0
 1998               6.7             -1.4                  9.5          7.6             12.3             6.3
 1999               6.4             -1.9                  8.9          8.2             10.7             3.4


 2000               4.8             -8.0                  8.3          8.6              9.3             1.3
 2001               6.1             -0.2                  7.5          8.6              6.0             8.9
 2002               6.9              7.6                  6.7          9.7              2.6            11.1
 2003               8.1            10.9                   7.5          9.9              4.4             8.2
 2004               8.7              9.0                  8.6         11.1              5.9             7.6

 2004:Q1            9.2            12.5                   8.5         11.2              4.7            10.0
       Q2           7.5              8.8                  7.2         10.3              4.2             3.2
       Q3           8.3              6.3                  8.8         11.0              5.9             9.0
       Q4           8.7              7.2                  9.0         10.0              8.1             7.3


 2005:Q1            9.6            14.4                   8.5          9.1              7.0            12.0
       Q2           8.1              0.1                  9.9         11.1              9.1             6.1
       Q3           9.1              5.1                 10.0         11.6              7.4            12.6
1. Changes shown are on an end-of-period basis.

                                              Table of Contents


Title                                                                           Table     Page


Flow of Funds Accounts, Third Quarter 2005                                                 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

Mortgage Companies                                  F.128    35     L.128     80

Real Estate Investment Trusts                       F.129    35     L.129     80

Security Brokers and Dealers                        F.130    36     L.130     81

Funding Corporations                                F.131    36     L.131     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 2004                                             114                115

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




                        Flow of Funds Accounts, Third Quarter 2005

                                                                       Discontinuities result from changes in
          This publication presents the flow of funds        valuation, breaks in source data, and changes in
accounts for 2005:Q3.                                        definitions. For most series, the value of the
                                                             discontinuity is zero for nearly all time periods.
Data revisions and other changes. The statistics in          However, in a few instances, the discontinuity is
the attached tables reflect the use of new or revised        nonzero for almost all time periods, or is quite large in a
source data. Most significant revisions appear in recent     particular quarter, such as a period when there is a
quarters; however, new source information resulted in        sharp increase or decrease in equity prices or a major
changes to data for earlier periods.      In this release,   break in source data.
assets of the state and local government employee
retirement funds sector (tables F.119 and L.119) have                  The discontinuities in a series can distort
been revised from 2003:Q3 onward to reflect new              estimated rates of growth in assets and liabilities
benchmark data from the Census Bureau for 2004.              between periods.        In order to minimize these
                                                             distortions, percentage changes in assets and liabilities
Explanatory notes for tables D.1, D.2, and D.3.              in flow of funds releases should be calculated as:
Domestic debt comprises credit market funds borrowed
by U.S. entities from both domestic and foreign              Percentage change = (Flow / Outstanding ) * 100
                                                                                   t        t                t-1
sources, while foreign debt represents amounts
borrowed by foreign financial and nonfinancial entities      Preliminary Estimates. Figures shown for the most
in U.S. markets only. Financial sectors consist of           recent quarter in these tables are based on preliminary
government-sponsored enterprises, agency- and GSE-           and incomplete information. A summary list of the
backed mortgage pools, and private financial                 principal sources of information available when the
institutions.   Credit market debt consists of debt          latest quarter's data were compiled is provided in a table
securities, mortgages, bank loans, commercial paper,         following this introduction. The distinction between
consumer credit, U.S. government loans, and other            "available" data and "missing" data is not between final
loans and advances; it excludes trade debt, loans for the    and preliminary versions of data, but rather between
purpose of carrying securities, and funds raised from        those source estimates that are fully ready when the
equity sources.                                              latest quarterly publication is compiled and those that
                                                             are not yet completed. However, the items that are
          Growth rates in table D.1 are calculated by        shown as available are, in general, also preliminary in
dividing seasonally adjusted flows from table D.2 by         the sense that they are subject to revision by source
seasonally adjusted levels at the end of the previous        agencies.
period from table D.3. Seasonally adjusted levels in
flow of funds statistics are derived by carrying forward     Margins of Uncertainty. Flow of funds statistics are
year-end levels by seasonally adjusted flows. Growth         subject to uncertainties resulting from measurement
rates calculated from changes in unadjusted levels           errors in source data, incompatibilities among data from
printed in table L.2 can differ from those in table D.1.     different sources, potential revisions in both financial
                                                             and nonfinancial series, and incomplete data in parts of
Relation of Flows to Outstandings. Estimates of              the accounts. The size of these uncertainties cannot be
financial assets and liabilities outstanding are linked to   quantified in precise statistical terms, but allowance for
data on flows.      However, figures on outstandings         them is explicitly made throughout the accounts by the
contain discontinuities or breaks in series that could       inclusion of "discrepancies" for various sectors and
affect analysis of particular relationships over time        instrument types. A discrepancy for a sector is the
specifically, outstanding in the flow of funds accounts      difference between its measured sources of funds and
are related to the flows in the following way:               its measured uses of funds. For an instrument category,
                                                             a discrepancy is the difference between measured funds
Outstanding = Outstanding + Flow + Discontinuity
             t                t-1      t                t
where "t" is the time period.

2


   borrowed through the financial instrument and                       A Guide to the Flow of Funds Accounts           is
   measured funds lent through that instrument. The size      available. The 1,200-page Guide, published in two
   of such discrepancies relative to the main asset or        volumes in January 2000, explains in detail how the
   liability components is one indication of the quality of   U.S. financial accounts are prepared and the principles
   source data, especially on an annual basis. For            underlying the accounts. The Guide can be purchased
   quarterly data, differences in seasonal adjustment         for $20.00 from the Board's Publications Services.
   procedures for financial and nonfinancial components       Publications Services accepts orders accompanied by
   of the accounts sometimes result in discrepancies that     checks as well as credit card orders.
   cancel in annual data.
                                                                       The Internet site for this release at the location
   Availability of Data. Flow of funds statistics are         shown above contains a link to an order form for the
   updated about ten weeks following the         end of a     Guide that can be mailed or faxed to Publications
   quarter. This publication -- the Z.1 release -- is         Services. In addition, the Internet site includes a link to
   available from the Board's Publications Services. Flow     the Guide's descriptions of the tables in the flow of
   of funds data are also available electronically through    funds accounts.
   the Internet at the following location:
                                                              Subscription Information.         The Federal Reserve
           http://www.federalreserve.gov/releases/Z1          Board charges for subscriptions to all statistical
                                                              releases. Inquiries for releases should be directed to:
             The Internet site also provides quarterly data
   beginning in 1952, organized in compressed files that                 Publications Services, Stop 127
   correspond to the tables published in this release.                         Board of Governors
   There are files for quarterly data for seasonally                     of the Federal Reserve System
   adjusted flows, unadjusted flows, outstandings, balance         20th Street and Constitution Avenue, N.W.
   sheets, and debt (tables D.1, D.2, and D.3).                              Washington, DC 20551
                                                                                 (202) 452-3244

                                                                                                             3



                         Availability of Data for Latest Quarter



                                   Available at time of publication           Major items missing


1. National income and             Preliminary estimates, seasonally          Unadjusted flows since 2004.
   product accounts (NIPA)         adjusted, for 2005:Q3.

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 2005:Q3. 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 2005:Q2;          2003. Quarterly Financial
   (tables F.102 and L.102)        Internal Revenue Service Statistics of      Report data for 2005:Q3.
                                   Income (IRS/SOI) preliminary data
                                   through 2003; securities offerings,
                                   mortgages, bank loans, commercial
                                   paper, and other loans through
                                   2005:Q3.

4. Nonfarm noncorporate            IRS/SOI data through 2002; bank and         Statistics of Income data since
   business                        finance company loans and mortgage          2002.
   (tables F.103 and L.103)        borrowing through 2005:Q3.

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         2004.
                                   equity in government-sponsored
                                   enterprises through 2005:Q3;
                                   preliminary data for checkable deposits
                                   and currency and trade payables
                                   through 2004.

6. State and local governments     Gross offerings and retirements of          Selected financial asset items
   (tables F.105 and L.105)        municipal securities, deposits at banks,    since 2003:Q3.
                                   and nonmarketable U.S. government
                                   security issues through 2005:Q3;
                                   selected financial assets through
                                   2003:Q3 from Census data and 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
                                   through 2005:Q3; Treasury data for
                                   loan programs through 2005:Q3.

4


  8. Rest of the world               Balance of payments data through        Balance of payments data for
      (U.S. international            2005:Q2; NIPA estimates; data from      2005:Q3.
      transactions)                  bank Reports of Condition and
      (tables F.107 and L.107)       Treasury International Capital System
                                     through 2005:Q3.


  9. Monetary authority              All data through 2005:Q3.               None.
      (tables F.108 and L.108)


  10. Commercial banking             All data through 2005:Q3 for            Data since 2004 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 2005:Q3.               None.
      (tables F.114 and L.114)

  12. Credit unions                  All data through 2005:Q3.               None.
      (tables F.115 and L.115)

  13. Property-casualty insurance    All data through 2005:Q2.               Data for 2005:Q3.
      companies
      (tables F.116 and L.116)

  14. Life insurance companies       All data through 2005:Q2.               Data for 2005:Q3.
      (tables F.117 and L.117)

  15. Private pension funds          Quarterly data through 2005:Q3;         Form 5500 data since 2000.
      (tables F.118 and L.118)       Internal Revenue Service/Department
                                     of Labor/Pension Benefit Guaranty
                                     Corporation Form 5500 data through
                                     2000.

  16. State and local government     Selected financial assets through       Data for 2005:Q3.
      employee retirement funds      2005:Q2 from Census data and the
      (tables F.119 and L.119)       comprehensive annual financial reports
                                     of state and local pension funds.

  17. Federal government retirement  Data from the Monthly Treasury          None.
      funds                          Statement, the Thrift Savings Plan, and
      (tables F.120 and L.120)       the National Railroad Retirement
                                     Investment Trust through 2005:Q3.

  18. Money market mutual            All data through 2005:Q3.               None.
      funds
      (tables F.121 and L.121)


  19. Mutual funds                   All data through 2005:Q3.               None.
      (tables F.122 and L.122)



  20. Closed-end funds               All data through 2005:Q2.               Data for 2005:Q3.
      (tables F.123 and L.123)

                                                                                                           5



21. Exchange-traded funds       All data through 2005:Q3.                   None.
    (tables F.123 and L.123)

22. Government-sponsored        Data for FHLBs, Farmer Mac, FCS,            Data since 2004:Q3 for Fannie
    enterprises                 FICO and REFCORP through                    Mae. Freddie Mac data for
    (tables F.124 and L.124)    2005:Q3.                                    2005:Q3.

23. Agency- and GSE-backed      All data through 2005:Q3.                   None.
    mortgage pools
    (tables F.125 and L.125)

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
                                2005:Q3.

25. Finance companies           All data through 2005:Q3.                   None.
    (tables F.127 and L.127)

26. Mortgage companies          Mortgage data through 1997:Q4.              Data since 1997:Q4.
    (tables F.128 and L.128)

27. Real estate investment      Data from SNL REIT DataSource               None.
    trusts (REITs)              through 2005:Q3.
    (tables F.129 and L.129)

28. Security brokers and        Data for firms filing FOCUS and             None.
    dealers                     FOGS reports through 2005:Q3.
    (tables F.130 and L.130)

29. Funding corporations        Estimates for this sector are largely residuals and are derived from data for
    (tables F.131 and L.131)    other sectors.