Changing Patterns in Household Ownership of Municipal Debt: Evidence from the 1989-2022 Surveys of Consumer Finances

The ownership structure of municipal debt in the United States has changed significantly since 1989, with ownership becoming concentrated in a smaller number of households over time. According to the Federal Reserve Board's Surveys of Consumer Finances, the share of households holding any municipal debt fell from 4.6% to 2.3% between 1989 and 2022. The share of total debt held by the wealthiest 0.5% of households rose from 24% to 51% over the same period. These changes have coincided with the growth of tax-deferred retirement investment accounts such as 401(k) plans as a primary location for household investing. Municipal bonds, which pay taxexempt interest, are almost never held inside these tax-deferred accounts. These changing patterns of ownership may have implications for the political economy of the United States' municipal bond market.