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October 17, 2012
Study shows $1.2T gap for public pensions
The 100 funds Milliman studied used a median rate of return for their investments of 8 percent. But the recession slashed into the market, dropping actual median returns to just 3.2 percent for the last five years, according to data from Callan Associates.
Gaze in wonder at the two-headed returns!
See Also:
Sarcasm Disclaimer
Source Data:
St. Louis Fed: Industrial Production Index
October 16, 2012
ReplyDeletePDI Introduces New Scratch Ticket Scanning Feature
"The enhanced lottery scanning feature is definitely a welcomed change and is already saving our stores nearly 100 hours a week," she said.
Yes! Automated lottery ticket verification! This is exactly what our country needs in order to prosper!
(The sarcasm appears to have flowed into the comments. Go figure.)
I suspect the post-1995 return to trend was thanks to our trade deficit as much if not more than productivity.
ReplyDeleteWe did increase our workforce by 4%:
http://research.stlouisfed.org/fred2/series/MANEMP
but I think we got a nice tailwind from all the free stuff from China. Plus the cheap diesel too, of course.
As for pensions, we have a $2T gap in social security that we call the SSTF.
ReplyDeleteIn 2011 we had $600B in payouts and $590B in contributions (that includes the $90B the treasury printed up in special bonds thanks to the 2% FICA cut).
1990-2009 we had over a trillion FICA over-contribution to the SSTF -- cash-on-cash (FICA in vs. expenses out).
2010 was a $16B cash shortfall and 2011 came in at -$11B. This is not a disaster as that's how we will drain the SSTF as intended, running a negative cash balance until the SSTF is back to its statutory minimum, one year of expenses.
But as the baby boom ages, SSA is going to have to hit up the UST for some real money -- by 2017 payouts are going to be $200B/yr higher than now -- that's a 30% increase in outgo.
"you know the math . . . we gotta get this thing movin'"
http://www.youtube.com/watch?v=omZ4DMSvXVk
We're going to need to basically double the tax level to just pay our existing social programs & $800B/yr defense expense.
Who's going to pay for the underfunded state pension mess is another deal entirely.
Not me, if I can help it. Oh how I wish I had studied Norwegian in school instead of Japanese. What was I thinking . . .
The trend in your first graph looks similar to the growth graph in an earlier post. It looks like you could have one trend from 1920 to about 1975 and another trend from 1975 to about 2008 or so.
ReplyDeleteTroy,
ReplyDeleteI suspect the post-1995 return to trend was thanks to our trade deficit as much if not more than productivity.
It's been a while since I worked the trade deficit into a chart. Today may be the day!
Anonymous,
ReplyDeleteGood eye! I'll post another chart shortly.
Anonymous,
ReplyDeleteThe new chart is up.