Although I can’t find a report that Goldman Sachs seems to have released at the end of last week, it’s worth highlighting this post from ZeroHedge, which highlights the analysts’ findings on state pensions. Take a look at the chart:
It’s good to see that Rhode Island is not one of the states failing even to make its required contribution, but note that the contribution that Rhode Island ought to be making, according to Goldman, is twice what it is now. That is, rather than taking about three-quarters of a percent of its GSP out of the economy the state of Rhode Island should be setting aside about 1.5%. (That’s somewhere on the order of $825 million.)
The reason (as I’ve written again and again) is that the state assumes it will get 7.5% on its investments every year, forever. In the most recent year, it made 2.22%. Even with the policies of the Federal Reserve and the Obama Administration wildly inflating the stock market, Rhode Island’s ten-year average was 6% when I checked a few months ago and 4.8% looking back to 2000.
The clock is ticking.