How big states do the spiral

Crain: The New York City retirement fund posted a dismal 3.4% return for the fiscal year ended June 30. Comptroller Scott Stringer delayed release of the figure for months. The poor returns mean the city will have to spend billions of dollars more in pension contributions. And with markets down so much this year, the city’s pension funds may soon be an increasingly severe budget problem. The fiscal 2014 investment gain of 3.4% is less than half of the city’s target of 7%, which is the rate of return the city assumes in determining how much to put aside to pay benefits. The city is expected to contribute an average of $6 billion annually over the next few years to the five pension plans that comprise the city's retirement system.

Let me note the big public sector states are being hit with hyperinflation in retiree health care, due to Obamacare.  It is in the medical inflation stats, and those stats will tend to be delayed price measurements.  Everything here is pro cyclical, a repeating sequence.