Lookie here: The Fed’s latest (and its preliminary) z1.pdf – The Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts of this-here country has just been dropped.
I am sensitive to readers skepticism of our using lots of paid AI, but this is the kind of 2-00+ page dense financial report, where we leverage A.I. to dig through the digital dirty and give us the “straight schiznit”.
You ain’t gonna like it:
“Newsworthy Highlights:
- Decline in Household Net Worth:
- Household and nonprofit net worth fell to $169.3 trillion in Q1 2025, down from $170.9 trillion in Q4 2024. This marks a notable decline of approximately $1.6 trillion.
- The decrease was driven by a $2.3 trillion drop in the value of corporate equities (directly and indirectly held) and a $0.2 trillion reduction in real estate values. This could signal market volatility or a correction in equity markets, potentially impacting consumer confidence and spending.
- Slowdown in Domestic Nonfinancial Debt Growth:
- Domestic nonfinancial debt growth slowed to a 2.8% annual rate in Q1 2025, down from 4.5% in Q4 2024. This deceleration suggests a cooling in borrowing activity across sectors.
- Household Debt: Growth slowed to 1.9% annually, with consumer credit at 1.3% and mortgage debt at 2.3%. This indicates cautious consumer borrowing, possibly due to higher interest rates or economic uncertainty.
- Federal Government Debt: Growth dropped significantly to 2.0% from 8.4% in the prior quarter, reflecting a potential shift in fiscal policy or reduced borrowing needs.
- Nonfinancial Business Debt: Accelerated to 4.8% from 0.8%, suggesting businesses are ramping up borrowing, possibly for investment or to manage rising costs.
- State and Local Government Debt: Increased to 4.3% from 1.3%, indicating a pickup in municipal borrowing, potentially for infrastructure or other projects. (Ure’s money is on pork futures, lol.)
- Data Revisions and Methodological Improvements:
- Several sectors saw significant revisions:
- Security Brokers and Dealers: Assets revised from 2021:Q4, incorporating new data on long and short positions from SEC FOCUS reports. Short position estimates for Treasury securities and agency-backed securities were revised back to 1975:Q1, with new series added for commercial paper, municipal securities, and corporate equities.
- State and Local Governments: Assets revised from 2003:Q2 due to improved estimation for various financial instruments, enhancing data accuracy.
- Mutual Fund Sector: Municipal securities transactions revised from 2000:Q1, now based on municipal bond fund transactions rather than price index revaluations.
- Nonfinancial Corporate Business: Revised from 2023:Q1 to incorporate 2023 IRS Statistics of Income data.
- Closely Held Equity: Market value of S corporation equity revised from 2018:Q1 using IRS data from 2018–2021.
- Integrated Macroeconomic Accounts (IMA): Revaluation accounts modified to include all assets and liabilities with nonzero revaluations, affecting multiple sectoral tables.
- These revisions improve data quality but may complicate historical comparisons, potentially drawing attention from analysts tracking long-term trends.
- Several sectors saw significant revisions:
Major Trend Changes:
- Shift in Debt Dynamics:
- The sharp slowdown in federal government debt growth (2.0% vs. 8.4%) is a significant departure from recent quarters, where rates were consistently higher (e.g., 10.0% in Q4 2023). This could reflect a tightening of fiscal policy or reduced deficit financing, potentially impacting economic stimulus.
- Conversely, the acceleration in nonfinancial business debt (4.8% vs. 0.8%) suggests businesses are leveraging more, possibly in response to improving economic conditions or to offset rising operational costs. This contrasts with the slower growth in household debt, highlighting divergent borrowing behaviors.
- Household Net Worth Decline:
- The $1.6 trillion drop in household net worth is a reversal from the upward trend observed in 2024 (e.g., $170.9 trillion in Q4 2024). The significant decline in equity values ($2.3 trillion) suggests potential stock market turbulence or a correction, which could have broader implications for consumer spending and economic growth.
- The modest decline in real estate values ($0.2 trillion) may indicate cooling in the housing market, potentially due to high interest rates or affordability constraints.
- State and Local Government Borrowing:
- The increase in state and local government debt growth (4.3% vs. 1.3%) marks a shift from relatively flat or negative growth in prior periods (e.g., -1.3% in Q4 2024). This could reflect renewed investment in public projects or infrastructure, potentially spurred by federal grants or economic recovery efforts.
Context and Implications:
- Economic Implications: The decline in household net worth and slower debt growth (except in business and state/local sectors) may signal a cautious economic environment. The drop in equity values could dent consumer confidence, while slower household borrowing suggests restraint in spending. However, increased business borrowing may indicate optimism about future growth or a need to finance rising costs. Wealth-effect investment may be on break.
- Policy Considerations: The sharp slowdown in federal debt growth could reflect fiscal consolidation or reduced borrowing needs, potentially influencing debates on government spending and debt ceilings. The pickup in state and local borrowing may align with infrastructure initiatives, which could stimulate local economies. Or, states are spending us into the poorhouse even if the feds have slowed.
- Market Impact: The equity market decline embedded in the net worth drop could attract attention from investors and policymakers, potentially prompting discussions about monetary policy adjustments if the trend persists.
Limitations:
- The data for Q1 2025 is preliminary and subject to revisions, as noted in the release. The extensive methodological updates (e.g., revisions to security brokers, state/local assets) may affect comparability with prior periods, warranting caution in interpreting trends.
- The document lacks specific data on the rest of the world (S.9.a tables are incomplete), limiting analysis of international financial flows, which could provide additional context for domestic trends.
Conclusion:
The Z.1 release highlights a notable decline in household net worth driven by falling equity values, a slowdown in overall debt growth (particularly federal and household), and an uptick in business and state/local borrowing. These shifts suggest a mixed economic picture: cautious consumer behavior, potential business optimism, and a pivot in fiscal dynamics. The extensive data revisions enhance reliability but may complicate trend analysis. These developments are likely to draw attention from economists, policymakers, and investors monitoring economic stability and growth prospects.”
A lot of this will be swerpt under the rug by idiots of both parties and by arguments over how spending more is going to fix things (see my book on Downsizing on the Peoplenomics side which is being serialize for more,) but “growth” is going away and the world – as in 1929 when things ran past logical limits – sets up for a bad dead-stick landing.
So, other than that Mrs. Lincoln, how’s the morning been?
Place a little wager on how long the market will bubble up in the face of “moderating reality”?
-ure
Yo G-Pops,
like to share a piece from Dr Robert Malone MD about Internet/govMint/Ai – very informative, straight forward and I believe helpful for the more experience in Life types. Short and to the point –
https://substack.com/app-link/post?publication_id=583200&post_id=165795981&utm_source=post-email-title&utm_campaign=email-post-title&isFreemail=true&r=1kk4yd&token=eyJ1c2VyX2lkIjo5NDk5ODAzNywicG9zdF9pZCI6MTY1Nzk1OTgxLCJpYXQiOjE3NDk3NDY3MTQsImV4cCI6MTc1MjMzODcxNCwiaXNzIjoicHViLTU4MzIwMCIsInN1YiI6InBvc3QtcmVhY3Rpb24ifQ.kUGEUHqst-l10tJBMyZXJwGejWRNRzymACVdBfQrlXA
Downsizing on the Peoplenomics side which is being serialize for more,) but “growth” is going away and the world – as in 1929 when things ran past logical limits – sets up for a bad dead-stick landing.
And during hard times what do you think happens if the kids find out you had a nickel?!?!?
The Little Rascals – Mike Fright, 1934. “Jimmy Had a Nickel”
https://m.youtube.com/watch?v=McNu7c1PQFs
Great post today.. tuesday the air conditioning system in the buggy wasn’t working.. we were hot..stopped to get a fountain water..twomedium..we had to pay for soda two twenty ounce cups with ice.. almost nine dollars just a few cents less..no e bucks for twenty ounces of ice and twenty ounces of water..its on its way…
little has been said specifically about the finer structure of these discontinuities. Instead, there is to be found continuum of subjective judgments, ranging from “a severe and prolonged recession” (the prediction we most often read in the financial press), to Kunstler’s evocative but unscientific-sounding “clusterfuck,” to the ever-popular “Collapse of Western Civilization,” painted with an ever-wider brush-stroke.
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The five stages of collapse
By Dmitry Orlov, originally published by ClubOrlov
February 26, 2008
Society
Elizabeth Kübler-Ross defined the five stages of coming to terms with grief and tragedy as denial, anger, bargaining, depression, and acceptance, and applied it quite successfully to various forms of catastrophic personal loss, such as death of a loved one, sudden end to one’s career, and so forth.
Several thinkers, notably James Howard Kunstler and, more recently John Michael Greer, have pointed out that the Kübler-Ross model is also quite terrifyingly accurate in reflecting the process by which society as a whole (or at least the informed and thinking parts of it) is reconciling itself to the inevitability of a discontinuous future, with our institutions and life support systems undermined by a combination of resource depletion, catastrophic climate change, and political impotence.
But so far, little has been said specifically about the finer structure of these discontinuities. Instead, there is to be found continuum of subjective judgments, ranging from “a severe and prolonged recession” (the prediction we most often read in the financial press), to Kunstler’s evocative but unscientific-sounding “clusterfuck,” to the ever-popular “Collapse of Western Civilization,” painted with an ever-wider brush-stroke.
For those of us who have already gone through all of the emotional stages of reconciling ourselves to the prospect of social and economic upheaval, it might be helpful to have a more precise terminology that goes beyond such emotionally charged phrases. Defining a taxonomy of collapses might prove to be more than just an intellectual exercise: based on our abilities and circumstances, some of us may be able to specifically plan for a certain stage of collapse as a temporary, or even permanent, stopping point.
Even if society at the current stage of socioeconomic complexity will no longer be possible, and even if, as Tainter points in his “Collapse of Complex Societies,” there are circumstances in which collapse happens to be the correct adaptive response, it need not automatically cause a population crash, with the survivors disbanding into solitary, feral humans dispersed in the wilderness and subsisting miserably. Collapse can be conceived of as an orderly, organized retreat rather than a rout.
For instance, the collapse of the Soviet Union – our most recent and my personal favorite example of an imperial collapse – did not reach the point of political disintegration of the republics that made it up, although some of them (Georgia, Moldova) did lose some territory to separatist movements. And although most of the economy shut down for a time, many institutions, including the military, public utilities, and public transportation, continued to function throughout. And although there was much social dislocation and suffering, society as a whole did not collapse, because most of the population did not lose access to food, housing, medicine, or any of the other survival necessities. The command-and-control structure of the Soviet economy largely decoupled the necessities of daily life from any element of market psychology, associating them instead with physical flows of energy and physical access to resources. Thus situation, as I argue in my forthcoming book, Reinventing Collapse, allowed the Soviet population to inadvertently achieve a greater level of collapse-preparedness than is currently possible in the United States.
Having given a lot of thought to both the differences and the similarities between the two superpowers – the one that has collapsed already, and the one that is collapsing as I write this – I feel ready to attempt a bold conjecture, and define five stages of collapse, to serve as mental milestones as we gauge our own collapse-preparedness and see what can be done to improve it.
Rather than tying each phase to a particular emotion, as in the Kübler-Ross model, the proposed taxonomy ties each of the five collapse stages to the breaching of a specific level of trust, or faith, in the status quo. Although each stage causes physical, observable changes in the environment, these can be gradual, while the mental flip is generally quite swift. It is something of a cultural universal that nobody (but a real fool) wants to be the last fool to believe in a lie.
Stages of Collapse
Stage 1: Financial collapse. Faith in “business as usual” is lost. The future is no longer assumed resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings are wiped out, and access to capital is lost.
Stage 2: Commercial collapse. Faith that “the market shall provide” is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down, and widespread shortages of survival necessities become the norm.
Stage 3: Political collapse. Faith that “the government will take care of you” is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance.
Stage 4: Social collapse. Faith that “your people will take care of you” is lost. As local social institutions, be they charities, community leaders, or other groups that rush in to fill the power vacuum, run out of resources or fail through internal conflict.
Stage 5: Cultural collapse. Faith in the goodness of humanity is lost. People lose their capacity for “kindness, generosity, consideration, affection, honesty, hospitality, compassion, charity” (Turnbull, The Mountain People). Families disband and compete as individuals for scarce resources. The new motto becomes “May you die today so that I die tomorrow” (Solzhenitsyn, The Gulag Archipelago). There may even be some cannibalism.
Here’s a little heard of theory on collapse of society..
https://youtu.be/r1ywppAJ1xs?si=1r3CoZCTEQaHSY_l
Here’s the book ..
https://www.gutenberg.org/ebooks/4239
MIT… what’s interesting is the question..did we unknowingly apply for the Darwin awards by signing up and continuing the present business model.. can it all be averted???
https://thereader.mitpress.mit.edu/the-collapse-is-coming-will-humanity-adapt/
The scary part..is they could push the noodle.. but even if they did it would only dive deeper.. trying to protect the business model of stuffing big buck billies pockets is only going to rip the country apart .. historically war was the event that redefined the economy.Where it played a paradoxical role in economic systems—while it brings destruction, it also forces nations into rebuilding efforts that can stimulate growth. After major conflicts, economies often undergo post-war recovery, driven by reconstruction projects, industrial expansion, and policy reforms. the sad part is even though we know that a war now would be horrific and few will survive..
https://www.cambridge.org/core/journals/review-of-international-studies/article/thinking-through-and-beyond-survival-in-a-nuclear-age/A20F744B09A8D337FF3D935ABE1AC49A
Harvard has a great study as well as Caltech and many others Princeton u iversity..none of it rebuilds society in the wake of the failed business model..
manufactured optimism in economic reports does nothing to change the reality of rising costs and financial strain on the working class. It’s a well-documented pattern; governments and institutions often manipulate statistics to maintain confidence, but history proves that reality eventually catches up.The Weimar Republic inflated its currency until people carried wheelbarrows of cash just to buy bread, while the Great Depression saw stock markets booming in reports—right up until they crashed. Today’s economic system still leans on those same tactics, propping up numbers while everyday people struggle to afford basic necessities.
It begs the question: How long can artificial stability hold before the cracks become impossible to ignore? with past depressions resulting in wars to rebuild the economy brings up a sad thought..in a nuclear society where a war between countries that have nuclear weapons says that a nuclear war potential and presents a different scenario. Unlike conventional wars, the destruction from nuclear conflict could be so severe that recovery might not follow the same pattern. Studies on post-nuclear survival suggest that widespread radiation, infrastructure collapse, and climate effects (like nuclear winter) could push civilization back to a primitive state, making organized recovery nearly impossible.Some researchers argue that small pockets of humanity might survive and rebuild, but the scale of devastation would likely prevent a structured economic resurgence like past wars.. Do these people chasing the business model realize the possible outcomes? from reading ancient Indian texts the concept says mankind would continue on but have to start back at square 1. to consider life be thrown away all over a number.. biblical records says ..The “number of man” in biblical texts often carries symbolic meaning, particularly in relation to human imperfection, materialism, and worldly pursuits. One of the most well-known references is Revelation 13:18, which speaks of the number 666, often interpreted as a representation of human fallibility, greed, or corruption.biblical warnings against the love of money and the dangers of prioritizing wealth over righteousness. Scriptures like 1 Timothy 6:10 caution that “the love of money is the root of all evil,” highlighting how greed can lead people away from faith and ethical living. Similarly, Proverbs 11:4 states that “wealth is worthless in the day of wrath, but righteousness delivers from death.”
Historically, societies that chase economic numbers without regard for moral or social welfare often face collapse. The Bible repeatedly warns against placing trust in material wealth rather than in God’s guidance. This could certainly be applied to modern business models that prioritize financial gain over human well-being.
Are they blind to this concept or just so swept away by the image and greed that they ignore the potential of this happening?
I bought a cheap bike trailer a decade ago. I use it as a hand cart mostly. Tires and rims are non-standard, and not easily replaced. It was not a particularly good investment. I probably should toss it.
Pulled the trigger on a new high end single wheel bicycle trailer I have been looking at for a couple of years. Costs as much as a serviceable bicycle. Will extend my non-hydrocarbon freight hauling capabilities considerably. Can’t decide if it is a bucket list or an anti-bucket list purchase.
Next big ticket splurge item will probably be an electric bicycle. The way traffic is around here, that would definitely be a bucket list item. Can’t make up my mind. The ones I want are not available in the US yet, and will probably be out of my price range when they show up later in the summer.
I have enough solar contingency equipment in hand to charge and electric bicycle, and keep the freezer and comms operating, but will entail some construction cost and labor to fully utilize. Hopefully that won’t be needed.
Cut entitlements Vs take stuff to collateralize. The taking of Iran’s stuff has begun.
Maybe off target…. i just had a thought to ask Zillo about our 1300 sq ft house in the outer Sunset of San Francisco. Don’t know why, but all this talk about ‘inflation’ got me going.
My parents bought this when I was almost six, in 1952 for $15,000. Mom sold it in the early 80’s for $250K.
Now?
Almost $1.3mm!
We are so screwed. A termite ridden stucco walled dump with the next house literally six inches apart (could hear the neighbors talking).
We all know what’s next. Your cash ain’t nuthin’ but trash.
Stiks
The I’s have it – Israel, Iran, Inevitable.
Totally random and off-topic but I’ve been glued to this series:
“The Man in the High Castle is an American dystopian alternate history television series created for the streaming service Amazon Prime Video, depicting a parallel universe where the Axis powers of Nazi Germany and the Empire of Japan rule the world after their victory in World War II.” Based on Philip K. Dick’s 1962 novel, the US has been divided into the Japanese Pacific States (California and the western coastal strip) and the Greater Nazi Reich, buffered by a thin neutral zone.
Parallel worlds, portals, technology and culture mined from alternate worlds and bought back here to our world.
The Man in the High Castle and his wife seem eerily similar to George and Elaine, holed up in a rural location with movie reels from alternate realities.
The high castle is an awesome series.. visited with the script writer about it..he was a friend on facebook.. I had this vision that the diary I bought in the middle eighties would make a great movie a great story.. it is my most precious book. I didn’t even know what it was.. I bought a box of old books at a rummage sale shoved it in the closet..then forgot about it..years later I needed a notebook and remembered there was a leather bound notebook in that box..it was the diary every other page photos.. The Tsar Nicholas II of Russia realized that something had to be done.. the people had been pointing out the starvation of the citizens.. ( he procrastinated about getting relief for the people..waited to long…)he went to the president asked for help. the president reached out to the YMCA to see if farmers here would be willing to teach the farmers there.. the diary was one farmers journey to escape the revolution.. the Bolsheviks .. I actually believed Anastasia survived and came to the USA. on there journey they were warning others of the revolution was happening and it all wasn’t just some conspiracy theory. A nanny from the palace asked them to take a young girl with them posing as a nurse. later after DNA proved Anastasia was killed it became pretty obvious the nanny handed over her own daughter to be saved..
what surprises me is time after time the warnings were told and ignored.. Germany France the let them eat cake if they don’t like it.. where Mari Antoinette would probably never lost her head.. she instead ignored the pleas for help ..where if she had brought buckets of soup ( stone soup story) she could have lived a long life.. Nicholas if he had acted sooner the whole family could have survived..in Germany assisting the public could have avoided the tyranny of Adolph … the fall of Rome and egypt..in every instance the separation of the social classes pushes the gap wider those at the bottom plead for a hand up..they aren’t interested in the riches..they are only concern is being able to survive.. the inability to see this need is what history repeatedly shows that when leaders neglect the needs of the people in favor of greed and self-preservation, civilizations begin to unravel. From ancient Rome to the Weimar Republic, the cycle is eerily familiar: wealth concentration at the top, growing disparity below, and eventually, social unrest or outright collapse.
The downfall of leaders often comes not just from their inability to govern where if they had only given them a hand up..