For use at 12:00 p.m., eastern time
                                                                                            Wednesday
                                                                                   September 21, 2005




FEDERAL RESERVE statistical release


Z.1




Flow of Funds Accounts
of the United States

Flows and Outstandings
Second Quarter 2005




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

         Domestic nonfinancial debt rose at a                           In the second quarter, household debt rose at a
seasonally adjusted annual rate of 7-1/4 percent in the        seasonally adjusted annual rate of nearly 10 percent,
second quarter of 2005. Debt growth in the second              reflecting a robust 11-1/2 percent expansion of
quarter was slower than the first-quarter pace, reflecting     mortgage debt and a more-moderate 3-3/4 percent
much slower borrowing by the federal government and            increase in consumer credit. Meanwhile, nonfinancial
state and local governments that more than offsets             business debt growth was 8-1/2 percent in the second
somewhat faster borrowing by households and non-               quarter, about 1 percentage point above the first-quarter
financial businesses.                                          pace. The pickup in nonfinancial business borrowing in
                                                               the second quarter was primarily accounted for by an
         On a seasonally adjusted basis, federal               increase in bank lending and mortgage borrowing.
government debt was about unchanged in the second
quarter, after having increased at an annual rate above                 At the end of the second quarter of 2005, the
14 percent in the previous quarter. State and local            seasonally adjusted level of domestic nonfinancial debt
government debt expanded at an annual rate of 5-1/2            outstanding was $25.2 trillion. Debt of the nonfederal
percent in the second quarter, noticeably below the 12         sectors was $20.7 trillion and federal debt held by the
percent pace registered in the first quarter.                  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           7.2              7.2             -5.5
 1996              5.2               4.0                  5.7           6.8              6.2             -1.5
 1997              5.3               0.6                  7.0           6.0              9.0             4.0
 1998              6.8             -1.4                   9.6           7.8             12.3             6.3
 1999              6.4             -1.9                   8.9           8.3             10.7             3.4


 2000              4.8             -8.0                   8.3           8.7              9.3             1.3
 2001              6.1             -0.2                   7.6           8.8              6.0             8.9
 2002              6.9               7.6                  6.8           9.8              2.7            11.1
 2003              8.1             10.9                   7.6          10.1              4.4             8.2
 2004              8.6               9.0                  8.5          10.9              5.7             7.4

 2003:Q1           7.2               5.6                  7.5          10.5              4.3             6.7
       Q2         10.4             17.7                   8.9          11.1              5.8            10.9
       Q3          7.6               9.2                  7.3          10.4              3.5             7.1
       Q4          6.4               9.5                  5.8           7.2              3.7             7.0


 2004:Q1           9.3             12.5                   8.6          11.5              4.7            10.0
       Q2          7.2               8.8                  6.8           9.8              3.7             3.2
       Q3          8.5               6.3                  9.0          11.2              6.2             9.0
       Q4          8.2               7.2                  8.4           9.4              7.5             6.6


 2005:Q1           9.9             14.4                   8.9           9.6              7.2            12.0
       Q2          7.3               0.1                  8.9           9.9              8.4             5.6
1. Changes shown are on an end-of-period basis.

                                              Table of Contents


Title                                                                           Table     Page


Flow of Funds Accounts, Second 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, Second Quarter 2005


         This publication presents the flow of funds         6.        Other insurance companies (previously tables
accounts for 2005:Q2.                                        F.118 and L.118) have been renamed to property-
                                                             casualty insurance companies (tables F.116 and L.116).
Data revisions and other changes. The statistics in
the attached tables reflect the use of new or revised        7.        The state and local government employee
source data. Most significant revisions appear in recent     retirement funds sector (tables F.119 and L.119) was
quarters; however, new source information resulted in        modified to include two additional asset categories:
changes to data for earlier periods.                         money market mutual funds and mutual fund shares. In
                                                             addition, estimates for existing categories of assets were
1.       The bank personal trusts and estates sector         revised from 2000 forward to reflect new data from the
(previously shown in tables F.116 and L.116) and the         Census Bureau.
investment in bank personal trusts and estates
instrument category (previously shown in tables F.227        8.        Revisions to the money market mutual fund
and L.227) have been eliminated. The assets held by          sector (tables F.121 and L.121) reflect new data on the
bank personal trusts and estates have been consolidated      composition of money market mutual funds' asset
into the direct holdings of the household sector (tables     holdings provided by the Investment Company Institute
F.100 and L.100). All sector flow and level tables after     from 2000:Q1 forward.
F.115 and L.115 and all instrument flow and level
tables after F.226 and L.226 have been renumbered.           9.        Total consumer credit (tables F.222 and L.222)
                                                             has been revised from 1998:Q1 forward owing to new
2.       Seasonal factors for quarterly financial flows      seasonal factors and other changes reflected in the
have been recalculated for the period 1995:Q1 onward.        Board's G.19 statistical release on September 9, 2005.
The factors were generated using the X-12-ARIMA/88
seasonal adjustment program from Statistics Canada.          Explanatory notes for tables D.1, D.2, and D.3.
                                                             Domestic debt comprises credit market funds borrowed
3.       The statistics in this publication reflect the      by U.S. entities from both domestic and foreign
annual revisions to the national income and product          sources, while foreign debt represents amounts
accounts from 2002 forward released by the                   borrowed by foreign financial and nonfinancial entities
Department of Commerce on July 29, 2005, and                 in U.S. markets only. Financial sectors consist of
subsequent information for 2005:Q2 released on August        government-sponsored enterprises, agency- and GSE-
31, 2005. The August 2005 issue of the Survey of             backed mortgage pools, and private financial
Current Business details the major features of the           institutions.   Credit market debt consists of debt
annual revision of the national income and product           securities, mortgages, bank loans, commercial paper,
accounts.                                                    consumer credit, U.S. government loans, and other
                                                             loans and advances; it excludes trade debt, loans for the
4.       Data for investment and depreciation flows of       purpose of carrying securities, and funds raised from
all sectors, and capital stocks for the household,           equity sources.
nonfarm nonfinancial corporate business, and nonfarm
noncorporate business sectors have been revised                        Growth rates in table D.1 are calculated by
beginning in 2002 to reflect updated annual estimates of     dividing seasonally adjusted flows from table D.2 by
fixed assets from the Bureau of Economic Analysis of         seasonally adjusted levels at the end of the previous
the Department of Commerce.                                  period from table D.3. Seasonally adjusted levels in
                                                             flow of funds statistics are derived by carrying forward
5.       Revisions to the rest of the world sector (tables   year-end levels by seasonally adjusted flows. Growth
F.107 and L.107) reflect new estimates of the balance        rates calculated from changes in unadjusted levels
of payments from the Department of Commerce for              printed in table L.2 can differ from those in table D.1.
1989 through 2004. The new estimates are detailed in
the July 2005 issue of the Survey of Current Business.

2

  Relation of Flows to Outstandings. Estimates of               difference between its measured sources of funds and
  financial assets and liabilities outstanding are linked to    its measured uses of funds. For an instrument category,
  data on flows.      However, figures on outstandings          a discrepancy is the difference between measured funds
  contain discontinuities or breaks in series that could        borrowed through the financial instrument and
  affect analysis of particular relationships over time         measured funds lent through that instrument. The size
  specifically, outstanding in the flow of funds accounts       of such discrepancies relative to the main asset or
  are related to the flows in the following way:                liability components is one indication of the quality of
                                                                source data, especially on an annual basis. For
  Outstanding = Outstanding + Flow + Discontinuity
               t                t-1      t                t     quarterly data, differences in seasonal adjustment
  where "t" is the time period.                                 procedures for financial and nonfinancial components
                                                                of the accounts sometimes result in discrepancies that
            Discontinuities result from changes in              cancel in annual data.
  valuation, breaks in source data, and changes in
  definitions. For most series, the value of the                Availability of Data. Flow of funds statistics are
  discontinuity is zero for nearly all time periods.            updated about ten weeks following the             end of a
  However, in a few instances, the discontinuity is             quarter. This publication -- the Z.1 release -- is
  nonzero for almost all time periods, or is quite large in a   available from the Board's Publications Services. Flow
  particular quarter, such as a period when there is a          of funds data are also available electronically through
  sharp increase or decrease in equity prices or a major        the Internet at the following location:
  break in source data.
                                                                        http://www.federalreserve.gov/releases/Z1
            The discontinuities in a series can distort
  estimated rates of growth in assets and liabilities                     The Internet site also provides quarterly data
  between periods.        In order to minimize these            beginning in 1952, organized in compressed files that
  distortions, percentage changes in assets and liabilities     correspond to the tables published in this release.
  in flow of funds releases should be calculated as:            There are files for quarterly data for seasonally
                                                                adjusted flows, unadjusted flows, outstandings, balance
  Percentage change = (Flow / Outstanding ) * 100
                        t         t               t-1           sheets, and debt (tables D.1, D.2, and D.3).

  Preliminary Estimates. Figures shown for the most                       A Guide to the Flow of Funds Accounts           is
  recent quarter in these tables are based on preliminary       available. The 1,200-page Guide, published in two
  and incomplete information. A summary list of the             volumes in January 2000, explains in detail how the
  principal sources of information available when the           U.S. financial accounts are prepared and the principles
  latest quarter's data were compiled is provided in a table    underlying the accounts. The Guide can be purchased
  following this introduction. The distinction between          for $20.00 from the Board's Publications Services.
  "available" data and "missing" data is not between final      Publications Services accepts orders accompanied by
  and preliminary versions of data, but rather between          checks as well as credit card orders.
  those source estimates that are fully ready when the
  latest quarterly publication is compiled and those that                 The Internet site for this release at the location
  are not yet completed. However, the items that are            shown above contains a link to an order form for the
  shown as available are, in general, also preliminary in       Guide that can be mailed or faxed to Publications
  the sense that they are subject to revision by source         Services. In addition, the Internet site includes a link to
  agencies.                                                     the Guide's descriptions of the tables in the flow of
                                                                funds accounts.
  Margins of Uncertainty. Flow of funds statistics are
  subject to uncertainties resulting from measurement           Subscription Information.          The Federal Reserve
  errors in source data, incompatibilities among data from      Board charges for subscriptions to all statistical
  different sources, potential revisions in both financial      releases. Inquiries for releases should be directed to:
  and nonfinancial series, and incomplete data in parts of
  the accounts. The size of these uncertainties cannot be                   Publications Services, Stop 127
  quantified in precise statistical terms, but allowance for                      Board of Governors
  them is explicitly made throughout the accounts by the                     of the Federal Reserve System
  inclusion of "discrepancies" for various sectors and                20th Street and Constitution Avenue, N.W.
  instrument types. A discrepancy for a sector is the                           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 2003.
   product accounts (NIPA)         adjusted, for 2005:Q2.

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

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:Q2.

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:Q2;
                                   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:Q2.
                                   and nonmarketable U.S. government
                                   security issues through 2005:Q2;
                                   selected financial assets through
                                   2003:Q2 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:Q2; Treasury data for
                                   loan programs through 2005:Q2.

4



  8. Rest of the world               Balance of payments data through        None.
      (U.S. international            2005:Q2; NIPA estimates; data from
      transactions)                  bank Reports of Condition and
      (tables F.107 and L.107)       Treasury International Capital System
                                     through 2005:Q2.


  9. Monetary authority              All data through 2005:Q2.               None.
      (tables F.108 and L.108)


  10. Commercial banking             All data through 2005:Q2 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:Q2.               None.
      (tables F.114 and L.114)

  12. Credit unions                  All data through 2005:Q2.               None.
      (tables F.115 and L.115)

  13. Property-casualty insurance    All data through 2005:Q1; preliminary   Final data for 2005:Q2
      companies                      data for 2005:Q2.
      (tables F.116 and L.116)

  14. Life insurance companies       All data through 2005:Q1; preliminary   Final data for 2005:Q2.
      (tables F.117 and L.117)       data for 2005:Q2.

  15. Private pension funds          Quarterly data through 2005:Q2;         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:Q2.
      employee retirement funds      2005:Q1 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:Q2.

  18. Money market mutual            All data through 2005:Q2.               None.
      funds
      (tables F.121 and L.121)


  19. Mutual funds                   All data through 2005:Q2.               None.
      (tables F.122 and L.122)



  20. Closed-end funds               All data through 2005:Q2.               None.
      (tables F.123 and L.123)

                                                                                                           5



21. Exchange-traded funds       All data through 2005:Q2.                   None.
    (tables F.123 and L.123)

22. Government-sponsored        Data for Freddie Mac, FHLBs, Farmer         Data since 2004:Q2 for Fannie
    enterprises                 Mac, FCS, FICO and REFCORP                  Mae.
    (tables F.124 and L.124)    through 2005:Q2.

23. Agency- and GSE-backed      All data through 2005:Q2.                   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:Q2.

25. Finance companies           All data through 2005:Q2.                   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:Q2.
    (tables F.129 and L.129)

28. Security brokers and        Data for firms filing FOCUS and             None.
    dealers                     FOGS reports through 2005:Q2.
    (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.