Figure 5. Financing gap and net equity retirement at nonfarm nonfinancial corporations, 1990-2008.
Data are plotted as curves. The financing gap ranges between about $20 billion and about $80 billion between 1990 and 1996 and then rises to reach a peak of about $310 billion in 2000. It then falls to about negative $20 billion in mid-2004, rebounds to a positive level of about $40 billion in 2005, then falls to about negative $170 billion by early 2006. The financing gap then begins to trend higher, reaching a peak of $232 billion before declining to $170 billion by year-end 2008.
The net equity retirement curve roughly follows the financing gap curve between the years 1990 to 1998, with the exception of falling slightly into the negative range in the 1992 to 1995 period. However, by 1999 it reaches a local peak of about $260 billion before falling to about $35 billion in 2000. The curve then rises to about $150 billion in 2001 to 2002 before dropping to the $30 billion to $65 billion range between 2002 and 2005. Beginning in 2005, there is a steady but steep increase of the series to more than $800 billion in mid-2007, followed by a steep decline to about $400 billion by the end of 2008.
NOTE: The data are four-quarter moving averages. The financing gap is the difference between capital expenditures and internally generated funds. Net equity retirement consists of funds used to repurchase equity less funds raised in equity markets.
SOURCE: Federal Reserve Board, Statistical Release Z.1, "Flow of Funds Accounts of the U.S,"table F. 102.
