Federal Reserve policymakers are closely monitoring the nation’s corporate debt situation after recent data found business debt exceeded that of households for the first time since 1991.
Nonfinancial companies boosted debt at a faster 5.7% annual pace in the third quarter to a total $15.987 trillion, while household borrowing eased up to a 3.3% rise to reach $15.986 trillion, according to new Fed data released Thursday, Dec. 12.
Corporate debt has ballooned with business investment declining for two straight quarters. Although business investment has historically climbed when borrowing rose, companies are now increasingly using that credit to return money to investors.