WASHINGTON (MarketWatch) -- Americans increased their household debt at an annual rate of 11% in the first quarter, the fastest growth in nearly 20 years, the Federal Reserve said in its quarterly flow of funds report.

Total outstanding debt in the household sector rose to $11.8 trillion.

The growth in nonfinancial debt marked the largest jump since the fourth quarter of 1986.

Nonfinancial debt had risen at a 9.4% clip in the fourth quarter.

The first quarter's acceleration was primarily due to increased borrowing by businesses and the government.

In the first quarter, the federal government's debt increased at a 12.9% rate, up from 7.8% in the fourth quarter. State and local government debt grew at a 5.8% rate, down from 8.6% in the last three months of 2005.

Borrowing by businesses increased at a 10.4% rate, up from 8.3% in the fourth quarter.

Meanwhile, household net worth increased at a 2.7% annual rate, reaching $53.08 trillion in the January-March period.
Greg Robb is a senior reporter for MarketWatch in Washington.

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