May 2011 U.S. Treasury Statement and Debt Overview

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The United States’ public debt stood at $14.270 trillion as of the end of March 2011, up from $14.025 trillion at the end of 2010 and more than double the level of a decade earlier. As can be seen from the charts above and below, a little over 90 percent of that debt was held by federal intra-governmental holding accounts (over half of which was comprised of the Federal Old-Age and Survivors Insurance Trust Fund, a.k.a., Social Security), and foreign and domestic investors of various types. The Federal Reserve held the remaining 9.3 percent. China, Japan and the United Kingdom were the three largest foreign holders of U.S. debt.
 

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The distribution of U.S. public debt purchases among the investor types underwent a sea change in 1Q2011: Private investors divested themselves of an estimated $90 billion; intragovernmental holdings also shrank by $14 billion. Foreign and international investors picked up an additional $37 billion in debt, but that was far below the record $753 billion purchased in 4Q2010. The disappearance of the other investor classes left the Federal Reserve as “the last man standing” with its purchases of $317 billion.
 

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The debt picture has continued to worsen since March. The total public debt outstanding grew to $14.345 trillion by the end of May 2011, a change of $75 billion in just three months. Because the debt is growing, tax receipts since the beginning of FY2011 (i.e., October 1, 2010) obviously have not kept pace with budget outlays. Indeed, the red ink deepened again in May as outlays of $232.6 billion and receipts of $174.9 billion added another $57.6 billion to the federal budget deficit.
 

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The amount of U.S. public debt held by foreigners was just shy of $4.5 trillion in april. China remained the largest foreign creditor ($1.153 trillion), having picked up $7.6 billion of Treasury securities. Brazil was the largest purchaser in April, with $13.4 billion.
 

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The Federal Reserve has surpassed China in terms of U.S. Treasury holdings ($1.413 trillion). Interestingly, the Fed’s pace of purchases has slowed somewhat. Earlier this year it would have doubled its holdings had the pace of purchases been maintained for 12 months; that is no longer the case. Nonetheless, more recent data shows the Fed has continued to pile up U.S. Treasury debt since April, and held $1.576 trillion as of mid-June.
 

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The rising three-month-average net inflows shown by the Treasury International Capital (TIC) accounting system indicate that more money flowed into the United States than flowed out in April. Net inflows were $68.2 billion, which raised the moving average to nearly $93 billion per month.