The 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities, showing that investment returns can’t keep up with ballooning obligations, according to Moody’s Investors Service.
The 25 biggest systems by assets averaged a 7.45 percent return from 2004 to 2013, close to the expected 7.65 percent rate, Moody’s said in a report released today. Yet the New York-based credit rater’s calculation of liabilities tripled in the eight years through 2012, according to the report.
"Despite the robust investment returns since 2004, annual growth in unfunded pension liabilities has outstripped these returns," Moody’s said. "This growth is due to inadequate pension contributions, stemming from a variety of actuarial and funding practices, as well as the sheer growth of pension liabilities as benefit accruals accelerate with the passage of time, salary increases and additional years of service."
Thursday, September 25, 2014
From Bloomberg, "Largest Public Pensions Face $2 Trillion Hole, Moody’s Says" by Brian Chappatta:
Posted 9/25/2014 03:23:00 PM
Monday, September 22, 2014
20 Percent Of Pumped US Oil Ship Via Rail: Railroad Revenue For Hauling Crude In 2013 Was 80 Times 2008 Revenue
From The Wall Street Journal, "Dangers Aside, Railways Reshape Crude Market: Shipping Crude by Rail Expands as New Pipelines Hit Headwinds and Train Companies Reap Revenue" by Russell Gold and Chester Dawson:
Today, 1.6 million barrels of oil a day are riding the rails, close to 20% of the total pumped in the U.S., according to the Energy Information Administration, chugging across plains and over bridges, rumbling through cities and towns on their way to refineries on the coasts and along the Gulf of Mexico. If all the railcars loaded with crude on one day were hitched to a single locomotive, the resulting train would be about 29 miles long.
Initially conceived of as a stopgap measure until pipelines could be constructed, and plagued by high-profile safety problems, crude by rail has nevertheless become a permanent part of the nation's energy infrastructure, experts say. Even pipeline companies have jumped into the rail business, building terminals to load and unload crude.
Behind the new industry are powerful economics. While it costs a bit more to ship petroleum on trains than through pipelines, railroads have the flexibility to deliver it to wherever it will fetch the highest prices. And capital expenses are far lower. Major railroads' revenue for hauling crude has jumped from $25.8 million in 2008 to $2.15 billion in 2013, according to federal data.
Posted 9/22/2014 11:34:00 AM
Tuesday, September 16, 2014
From The Wall Street Journal, "A Republican War on Poverty: The myth about the uncaring GOP is being debunked again." by Gary MacDougal:
... the Rube Goldberg patchwork of 126 federal safety-net human-services programs focused largely on the 46 million Americans now in poverty. Including state-level programs, annual government spending on these programs is almost $1 trillion. Dividing $1 trillion by 46 million shows an average of $21,700 for each American in poverty, or nearly $87,000 for a family of four. That's almost four times the $23,850 a year federal poverty line for that family. While not practical, a cash payment of that amount would lift everyone in poverty well into the middle class. Clearly we are not getting the results we should from this enormous level of spending. [Emphasis added.]
Posted 9/16/2014 01:00:00 AM
Friday, September 12, 2014
From Congressional Budget Office, "CBO Launches YouTube Channel" posted by Doug Elmendorf on September 12, 2014:
CBO is excited to announce the launch of its YouTube channel! We will post videos of Congressional testimonies, press briefings, and other events involving CBO at www.youtube.com/uscbo.
Posted 9/12/2014 01:33:00 PM
Thursday, September 11, 2014
From Bloomberg, "Apple Pay Could Make You Poorer" by Cass R. Sunstein:
A little social science: People who use credit cards tend to give bigger tips at restaurants and spend more at department stores. They are also more likely to forget, or to underestimate, the amounts of their recent purchases.
A study in 2001 by the Massachusetts Institute of Technology's Drazen Prelec and Duncan Simester found that people pay a substantial "credit-card premium," meaning a higher expenditure for a given good simply because they are using a credit card rather than cash. Their experiment showed that the premium may be as high as 100 percent, at least when the market price of the good is uncertain (such as tickets for a sold-out sporting event). Even for ordinary goods, where market prices are easy to find, they found a credit-card premium of as much as 36 percent.
You might think that credit cards are special, because people are essentially borrowing money. Maybe the credit-card premium is a product of the time lag between consumption and payment. But a study in Denmark, made public this year, finds that when university students use debit cards rather than cash, they are willing to spend significantly more on coffee and beer.
Posted 9/11/2014 02:00:00 AM
From The Wall Street Journal, "Franchise Brands With Higher-Than-Average Default Rates: Quiznos, Cold Stone Creamery, Planet Beach Franchising, Huntington Learning Centers Franchisees Had Trouble" by Sarah E. Needleman and Coulter Jones:
|Source: The Wall Street Journal|
Posted 9/11/2014 01:00:00 AM
Tuesday, September 9, 2014
60 Percent Of NY Baby Boomers Will Likely Move Out Of State Upon Retirement: High Taxes And Utility Costs A Factor
From The Washington Post, "New York’s Baby Boomers might give up on their state for retirement, study finds" by Niraj Chokshi:
Among working, voting New York Baby Boomers, 73 percent said they’re more confident than not that they will be able to retire, according to an AARP study published Monday. Of that group, exactly 3 in 5 say it’s likely they will retire out of state.
***The study estimates the impact of their departure at $105 billion annually—the sum of the estimated 1.6 million retirees likely to leave, an average retirement income of $28,000 and a retirement-dollar economic multiplier of $2.36. ***About half of the 50+ population—52 percent—noted a high level of concern over property taxes and utilities costs, while slightly more than one in three were concerned about monthly rent or mortgage payments.
|Source: The Washington Post|
Posted 9/09/2014 10:51:00 AM
Monday, September 8, 2014
From Bloomberg, "U.S. Open Final Ticket Prices Plunge Without Star Power" by Eben Novy-Williams:
The odds before the [US Open Tennis] tournament of [Kei] Nishikori and [Marin] Cilic meeting in the final were 1,000-1, according to U.K. bookmaker William Hill Plc. (WMH) Both men entered the tennis season’s final major tournament with 66-1 odds of winning the title.
Yesterday morning, the day after the semifinal upsets, the average price paid for resale tickets for today’s 5 p.m. final at the National Tennis Center in New York had fallen 26 percent to $390, according to ticket aggregator Seatgeek. Analyst Connor Gregoire said the $147 get-in price was the cheapest the company had seen for a U.S. Open men’s final since it began tracking the event in 2010.
***The average ticket sold for today’s match is $390, down $136 from the $526 average three days earlier, when Federer and Djokovic were both favored to make the championship match, according to Seatgeek. In that time span, the resale price of courtside seats has dropped 19 percent to $1,542.
Posted 9/08/2014 01:44:00 PM
Saturday, September 6, 2014
Link to Errata Sheet for the 2014 Medicare Trustee Report.
Link to the Centers for Medicare and Medicaid Services website to download the trustees report from the government website.
Posted 9/06/2014 12:33:00 PM
From The Washington Post, "TV is increasingly for old people" by Cecilia Kang:
TV is increasingly for the old, and the Internet is for the young, according to new research by media analyst Michael Nathanson of Moffett Nathanson Research.
The median age of a broadcast or cable television viewer during the 2013-2014 TV season was 44.4 years old, a 6 percent increase in age from four years earlier. Audiences for the major broadcast network shows are much older and aging even faster, with a median age of 53.9 years old, up 7 percent from four years ago.
These television viewers are aging faster than the U.S. population, Nathanson points out. The median age in the U.S. was 37.2, according to the U.S. Census, a figure that increased 1.9 percent over a decade. So to put that in context of television viewing, he said TV audiences aged 5 percent faster than the average American.
Posted 9/06/2014 11:48:00 AM
Friday, September 5, 2014
US Subsidiaries Of Foreign Based Companies Have Higher Effective US Tax Rates Than US Based Companies
From the Tax Foundation, "IRS Data Contradicts Kleinbard’s Warnings of Earnings Stripping from Inversions" by Scott A. Hodge:
... IRS data actually shows that the U.S. subsidiaries of foreign-based companies have smaller interest deductions relative to their total receipts than do American-headquartered firms and, interestingly, they have higher effective tax rates than their domestic counterparts.
|Source: Tax Foundation|
Posted 9/05/2014 02:41:00 PM
From the Tax Foundation, "New Study Finds New York Growth in Millionaires Slowest in the Nation" by Josh D. McCaherty and Lyman Stone:
The Empire Center, a nonpartisan think tank in New York, released a report today suggesting that New York has lagged behind the rest of the nation in making new millionaires. From 2011-2012, the United States on the whole saw a 29 percent increase in the number of millionaire tax filers. New York however saw only a 14.6 percent increase in the same period, the lowest rate of growth in the country.
The report further points out that New York had also "trailed the national rate of increase in the number of taxpayers earning AGI of $200,000 or more." Authors E.J. McMahon and Daniel Russo argue that these are troubling indicators and point to weaknesses in the state’s economic growth and wealth creation. In fact, there is good reason to believe taxes may play a role in slowing the rate at which states gain new millionaires.
One deterrent for the state’s wealth creation is its "Millionaires Tax."
***At least some portion of New York’s slow millionaire growth may be due to migration. This can be seen from our state migration map, which shows that from 2000-2010, New York had a net loss of $45.6 billion in personal income from people leaving the state. While the state remains a leader in terms of millionaires per capita for now, the state’s continuing high taxes may help other states take the lead. Just since 2010, New York’s share of millionaires nationwide fell from 12.7 percent to 11.2, while Texas’ rose from 8.5 percent to 9.3.
Posted 9/05/2014 02:28:00 PM
From The Washington Post, "Map: The counties that have received the most undocumented immigrant children" by Niraj Chokshi:
|Counties with more than 50 undocumented immigrant kids. Click to view interactive version |
Source: Niraj Chokshi/The Washington Post
Posted 9/05/2014 01:11:00 AM
Wednesday, September 3, 2014
From Congressional Budget Office, "CBO’s Projection of Federal Interest Payments" Posted by Wendy Edelberg, Assistant Director for Macroeconomic Analysis, on September 3, 2014:
Federal debt held by the public will reach about $12.8 trillion by the end of this fiscal year, an amount that equals 74 percent of the nation’s total output (gross domestic product, or GDP) this year. If current laws generally remained unchanged—the assumption that underlies CBO’s baseline projections—CBO projects that such debt would climb to $20.6 trillion, or 77 percent of GDP, in 2024.
Interest payments on that debt represent a large and rapidly growing expense of the federal government. CBO’s baseline shows net interest payments more than tripling under current law, climbing from $231 billion in 2014, or 1.3 percent of GDP, to $799 billion in 2024, or 3.0 percent of GDP—the highest ratio since 1996. The rising debt accounts for some of that increase, but much of it stems from CBO’s expectation that—largely owing to the improving economy—the average interest rate paid on that debt will more than double over the next 10 years, from 1.8 percent in 2014 to 3.9 percent in 2024. (Although interest rates are projected to rise sharply, CBO’s current projections of those rates are lower than its projections earlier in the year, reflecting the agency’s reassessment of the factors influencing real interest rates.)[Emphasis added.]
Posted 9/03/2014 03:59:00 PM
From The Wall Street Journal, "U.S. Manufacturing Is Rolling on Aged Wheels: Companies Skimp on Industrial Equipment While Pursuing Deals and Share Buybacks" by James R Hagerty:
Even as economic indicators rise, domestic capital spending has remained anemic by historical standards, especially in manufacturing.
***The average age of industrial equipment in the U.S. has risen above 10 years, the highest since 1938, economists at Morgan Stanley said in a recent report.
The growth of all types of capital spending by U.S. firms grew just 3% last year, far below the long-term average of more than 8%, Morgan Stanley says. The firm sees only modest improvement ahead: 3.8% growth this year and 5.3% in 2015.
|Source: The Wall Street Journal|
Posted 9/03/2014 12:30:00 AM
Monday, September 1, 2014
From American Cancer Society, "Adults Take In 200 More Calories Per Day When They Eat Out" By Elizabeth Mendes:
When adults in the United States eat out, they are consuming around 200 extra calories per day. This increased intake occurs whether they eat at a full-service or fast-food restaurant.
These findings are from a new study led by American Cancer Society researcher Binh Nguyen, Ph.D., and published online Aug. 7 in the journal Public Health Nutrition. The authors analyzed nationally representative data from surveys of 12,528 adults aged 20 to 64, conducted from 2003 to 2010.
Not only are people taking in more calories when they dine out, but they are also consuming less nutritious food. Adults in the study who ate at a restaurant consumed more saturated fat, sugar, and sodium.
Posted 9/01/2014 12:09:00 PM