US household wealth climbed to a fresh record in the fourth quarter as Americans benefited from a historic market rally that followed President Donald Trump’s election.

Household net worth increased $164 billion, or 0.1% from the prior quarter, to $169 trillion, a Federal Reserve report showed Thursday. The value of Americans’ equity holdings rose nearly $264 billion. The overall gain was restrained by a decline in the value of real estate.

Shareholders largely benefited from a post-election surge in stock prices as investors piled into the so-called Trump trade, betting the Republican would enact pro-business policies during his second administration. 

However, stocks have mostly reversed course in recent weeks — wiping out $5 trillion in gains — as Wall Street sours on the outlook amid concerns that the Trump administration’s tariffs are raising the odds of a recession. The recent hit to stock portfolios risks causing upper-income Americans, who have largely been responsible for robust consumer-spending growth, to cut back.

The Fed’s report showed that consumers boosted their borrowing at a 3.1% annualized pace, the fastest since the second quarter of 2023. Consumer non-mortgage credit accelerated to a 2.6% pace, while mortgage debt eased.

Business debt outstanding decelerated to about a 1% annualized rate, the slowest pace in a year. In the public sector, state and local government debt shrank by the most in two years.

Meanwhile, deposits held by households and nonprofit organizations, which includes savings and checking accounts and money market funds, rose by $578 billion — the most since 2021, to a record $19.4 trillion.

This story was originally featured on Fortune.com

After a yearslong downturn that left U.S. offices empty, Blackstone Inc. President Jon Gray sees the sector as ripe for new bets. His real estate dealmakers are preparing to scoop up a stake in a 50-story building in Midtown Manhattan, the strongest signal yet that it sees the market primed for a rebound.

Executives running the firm’s commercial mortgage trust, meanwhile, are still sorting through old office loans gone bad. Blackstone Mortgage Trust Inc. untangled more than $1 billion of soured debt, mostly tied to offices, in the final quarter of last year. 

And the REIT — known by its ticker, BXMT — still has more than $1 billion of troubled loans in its roughly $17 billion book. It’s a reminder that the real estate recovery is uneven and halting.

“We’ll certainly see less office in the portfolio as we move forward here,” BXMT Chief Executive Officer Katie Keenan, a 13-year Blackstone veteran, told analysts last month. The trust had just posted its first full-year net loss since Blackstone took it over in 2012. Much of the loss came from recognizing that BXMT couldn’t collect some loans in full.

BXMT shares finished last year down some 50% from their pandemic peak, lopping off about $2 billion in market value before rebounding in February. It’s just a small part of the wider firm that manages $1.1 trillion, but the lender’s health is intertwined with parts of Blackstone. A handful of borrowers — such as Australian gaming company Crown Resorts — are managed by the world’s largest commercial real estate owner.

Blackstone has emphasized that offices are less than 2% of its US real estate equity portfolio. BXMT, on the other hand, was filled with office loans — more than 50% of its portfolio — at the very start of the Covid-19 pandemic. Through write-offs, repayments and taking the keys to buildings, it has shrunk that share to about a third. More than half of BXMT’s US office loans are watchlisted or impaired.

“The office loan exposure was the big overhang on their stock for about two years,” Harsh Hemnani, a senior analyst at real estate research firm Green Street, said of BXMT. “Now we’re seeing that resolving itself, but also certain things will take time to play out.”

Short sellers such as Carson Block warned the REIT would get swept up in the commercial property meltdown. Block disclosed a bet against BXMT in late 2023, and the trust slashed its dividend less than a year later. Block didn’t respond to a request for comment on the status of his short position, though he told Bloomberg Television this week his firm is “happy” its thesis played out. Still, Block said he’s less sure about the short case for commercial real estate going forward given uncertainty around rates. Short positions in BXMT have halved to about 8.4% of outstanding shares over the past year or so, according to data compiled by S&P Global.

BXMT says its fortunes are lifting as a real estate recovery gathers momentum. 

“One year ago, we said that real estate values were bottoming and that’s exactly what has happened,” BXMT said in an emailed statement. The trust is moving aggressively to deploy near-record liquidity into new loans, and office loans are throwing off cash, according to the statement. More than half of repayments in roughly the past year have come from office loans.

Still, investors have little appetite for all but the best offices. The trust is working to sell a collateralized loan obligation — essentially a bond made up of loans it has originated — for the first time since 2021. The deal will be backed mostly by apartment complexes, hospitality and industrial properties, a shift from prior CLOs linked mostly to office buildings. 

Blackstone’s real estate team was bullish on office landlords in major metropolitan areas a decade ago, according to people familiar with the matter. CEO Steve Schwarzman told associates the buildings could still be profitable even if they were only half occupied, another person said.

But few predicted the upheaval that the Covid-19 pandemic would bring. Values have fallen by more than 75% on average from the peak for most buildings in New York, according to Stijn Van Nieuwerburgh, a professor at Columbia University’s Graduate School of Business.

And BXMT carried much greater global office exposure than peers. While the Blackstone unit had more than half its portfolio tied to office loans at the start of the pandemic, similar arms at Apollo Global Management Inc. and KKR & Co. reported concentrations below 30%. 

Analysts have questioned whether the trust needs to reserve more for potential credit losses. BXMT set aside about $734 million to account for near-term credit losses at the end of 2024, according to company filings. That’s up from $125 million at the end of 2021.

Hemnani, the Green Street analyst, said the trust’s loan loss reserves still aren’t big enough. 

“We still think their CECL reserves are not fully accounting for the losses that they might experience,” he said, referring to the accounting term for near-term loan losses. “But the gap between the losses we’re expecting and their reserves is narrowing very quickly.”

In a statement, the trust said it has taken a prudent approach to its reserves that has been “validated by the fact that our resolutions have overall been more favorable than implied by our loss reserves.” 

It resolved $1.6 billion of impaired loans in 2024 above carrying values.

Queens Warehouse

BXMT has been working to clean up less-than-pristine deals as the office market slowly recovers. In New York, for example, Blackstone put additional capital into the Falchi Building, which has a $200 million loan with BXMT that wasn’t repaid upon maturity, according to people familiar with the matter. Located in an industrial part of Queens near a recycling plant and construction suppliers, the warehouse-turned-office leases space to Uber and New York City’s taxi commission. 

BXMT also resorted to some financial engineering to buy borrowers time. In the past year, the trust has agreed to let certain borrowers delay cash payments in exchange for higher interest and more fees. Some of the modifications include payment in kind, which means interest payments are delayed and instead added on to the principal due. Such maneuvers are rarely a good sign for a borrower. Still, these represented a small fraction of BXMT’s interest income — only 1% by one measure — last year, the trust said. 

The trust has received more financial wiggle room itself. Last year, to avoid violating a covenant on BXMT’s own borrowings, executives persuaded banks to loosen restrictions on the debt. It said the agreement is “generally standard” among its peers. 

Blackstone’s broader real estate lending unit, helmed by 14-year firm veteran Tim Johnson, has been through some personnel changes. Mike Nash — who co-founded the real estate debt business and was known for composure during complex workouts — moved to the firm’s hedge fund arm in 2021 and recently retired, though he remains on BXMT’s board. Jonathan Pollack, Blackstone’s former head of real estate credit, left last year to become Starwood Capital Group’s president.

In a call with analysts last month, BXMT painted a picture of an enterprise firmly in rebound mode. But there’s more to do before the unit can fully take advantage of the more attractive rates boosting other corners of the credit market. It’s still seeing some losers trickle in: executives referenced one new impairment, an unnamed UK office loan. The building represents less than 1% of its portfolio and sits in a “strong submarket of London,” the trust said. 

Investors appear sanguine. In the days after its most recent earnings release, traders bid up the stock some 5%. It’s up 17% year-to-date, outperforming peers.

And BXMT executives aren’t swearing off offices for good. They just saw their marquee deal — a 2018-era, $1.8 billion loan for a Manhattan skyscraper called The Spiral — repaid in full.  

“If we could do more deals like The Spiral, we absolutely would,” Keenan, the CEO, said during the earnings call. But in a quarter in which BXMT invested and pledged more than $2 billion in originations, she warned the firm will tread carefully. “The aperture of the type of office opportunities and where we see outperformance is quite narrow, and we’re going to be extremely selective.”

This story was originally featured on Fortune.com

Elon Musk’s Department of Government Efficiency now has 10 staffers at the Social Security Administration as the Trump White House looks for evidence to support its claim that there could be millions of dead people receiving public benefits. 

Two sworn statements filed in federal court late Wednesday show that the SSA has staffed up in recent weeks to include four special government employees and six more DOGE staffers on loan from other departments.

Their mission: detecting waste, fraud and abuse in the nation’s 90-year-old social insurance agency.

Musk has called Social Security a “Ponzi scheme,” and suggested this week that there could be as much as $700 billion a year in entitlement fraud. Critics have said he is setting up a move to cut the popular program. Others are concerned about Musk’s team having access to Americans’ most sensitive data.

From 2015 through 2022, Social Security estimated that it made almost $72 billion in improper payments — less than 1% of benefits paid, according to an inspector general report last year. Not all of that amount was because of fraud, however, and all but $23 billion was able to be recovered.

At least seven DOGE staffers have been granted access to a database known as the Master File of Social Security Number Holders and SSN Applications, also known as Numident. They currently have read-only access as they try to connect the dots between Social Security numbers and possible fraudulent benefits.

That database is often missing dates of death, a fact that President Donald Trump and Musk, his billionaire adviser, have used as the basis of claims that more than 20 million people over 100 are still on the Social Security rolls. 

“And money is being paid to many of them, and we’re searching right now,” Trump said in a speech to Congress last week. 

Leland Dudek, an anti-fraud expert who Trump promoted to acting Social Security Commissioner last month after Dudek was suspended for cooperating with DOGE, has pushed back on those claims. 

Just because a date of death is missing from Numident doesn’t mean payments are being made, Dudek said in a statement. Those are managed in a separate database, the Master Beneficiary Record.

“We are steadfast in our commitment to root out fraud, waste, and abuse in our programs, and actively correcting the inconsistencies with missing dates of death,” he said. 

Death Data

Indeed, at least six DOGE staffers at the agency are working with death data. The Social Security Administration maintains a Master Death File of more than 94 million reported deaths collected from state records and funeral directors.

Other databases being used in the hunt are the Supplemental Security Record, which contains data on disability benefits and Treasury Department payment files. The benefits databases can also contain limited taxpayer information used to calculate eligibility for benefits.  

DOGE has access to copies of the databases, limiting the ability to make changes, the agency’s chief technology officer, Michael Russo, said in a sworn statement. There are safeguards to ensure there are no private servers connected to SSA data, he said. 

Russo’s statement was included in a court filing late Wednesday in a lawsuit brought by the American Federation of State County and Municipal Employees. The public employees union filed suit against DOGE and the Maryland-based Social Security Administration, trying to block what it calls an “unprecedented data grab.”

“The overall goal of the work performed by SSA’s DOGE Team is to detect fraud, waste and abuse in SSA programs,” Russo said. “This level of access ensures these employees can review records needed to detect fraud but does not allow them the ability to make any changes to beneficiary data or payment files.”

Neither Russo nor Deputy Commissioner Florence Felix-Lawson, who filed a separate sworn statement, would identify the DOGE staffers by name, “to avoid exposing them to threats and harassment.”

But special government employees and DOGE detailees at the agency include former Tesla board member Antonio Gracias of Valor Equity Partners; Scott Coulter, formerly of Lone Pine Capital; and Marko Elez, re-hired by DOGE and sent to Social Security after resigning from the Treasury Department over reports of racist social media posts. 

The Social Security Administration has emerged as a key outpost for DOGE, because it administers $1.6 trillion in annual benefits but also because of its unique position to access a wide range of government data. Indeed, DOGE’s hunt for fraud in Social Security is also radiating out into other federal agencies.

Two DOGE team members also have access to the National Directory of New Hires, a database kept by the Heath and Human Services Departments’ Office of Child Support Services to help states enforce child support orders.

And one Social Security DOGE team member will soon be dispatched to the Small Business Administration. 

The court filing also shows how DOGE team members can move around from agency to agency. Six Social Security DOGE staffers are on loan from other agencies, including the National Aeronautical and Space Administration, Office of Personnel Management, Labor Department and General Services Administration. 

And one comes from the US DOGE Service, the White House agency created by Trump’s Inauguration Day executive order creating the cost-cutting initiative.

This story was originally featured on Fortune.com