Fed's Flow of Funds Report Shows US Corporate Plan Assets Shrank 6.8% in Second Quarter

(September 19, 2010) — According to the Federal Reserve’s Flow of Funds latest report, US corporate defined benefit and defined contribution plans had combined assets of $5.32 trillion as of June 30, a 6.8% drop from three months earlier.

As of June 30, while corporate DB plan assets amounted to $2.05 trillion, down 5.4% from the previous quarter, corporate DC plan assets came to $3.27 trillion, down 7.5%, as reported by Pensions & Investments. Meanwhile, total assets in state and local government retirement funds were $2.56 trillion, down 8.2%, while the federal government’s retirement funds totaled $1.311 trillion, down 1%.

Additionally, the report concluded that household net worth — the difference between the value of assets and liabilities — fell to $53.5 trillion, far below the $64.2 trillion it had reached at the end of 2007 when the recession began. The report revealed financial assets, mainly stocks and mutual funds, faced steep declines, with stocks alone down $1.9 trillion to $14.9 trillion, more than offsetting minor gains in other areas.

While federal government debt increased during the second quarter by 24.4%, reflecting billions of dollars invested by the Obama administration to try and jumpstart a faltering economy, state and local government debt shrank 1.3% during the same period.