WASHINGTON (AFX) -- Americans increased their household debt at an annual rate of 11.6% in the third quarter, the fastest growth in 18 years, the Federal Reserve said Thursday in its quarterly flow of funds report.

Total outstanding debt in the household sector rose to $11 trillion.

Total debt in the economy increased at a 9.1% annual rate, one percentage point faster than in the second quarter, to $25.72 trillion.

Non-federal borrowing grew at a 10% pace, the fastest in six years. Total nonfederal debt outstanding grew to $21.13 trillion.

Net national savings fell by $120.5 billion at an annual rate. It was the first quarter that net savings had been negative since the Fed began tracking the data in 1952.

In the household sector, borrowing was paced by real estate loans. Mortgage debt grew at a 14% pace, while credit card debt increased 5.4%.

Meanwhile, household net worth increased at 10.6% annual rate to a record $51.09 trillion on increases in the value of assets already held. Real estate assets grew by $546 billion.

Net investments by households fell at an annual rate of $72 billion. Investments in directly held corporate equities fell at an annual rate of $556 billion.

Borrowing by businesses increased at a 7.4% rate, down from 9.1% in the second quarter.

The federal government's debt increased at a 5.1% rate, up from 0.1%. State and local government debt grew at a 12.6% rate, up from 6% in the second quarter.

Disposable personal income increased at a 2.8% annual rate to $9.04 trillion. Household net worth was 5.65 times disposable income, up from 5.54 times in the second quarter.

Even with the hit from Hurricane Katrina, corporate profits continued to account for 13% of national income in the third quarter, the highest level since 1956.

Compensation of employees rose to 66.4% of national income from 64.9%. It's the highest level in four years. This story was supplied by MarketWatch. For further information see

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