When is $2T Really Not $2T?

By: Russ Kamp, CEO, Ryan ALM, Inc.

In 2021, the U.S. ran a deficit of $2.772 trillion. We know that much of the stimulus created by that deficit spending was in reaction to the economic disruption created by Covid-19. Fast forward 5-years, and the 2026 fiscal year (10/1/25-9/30/26) federal deficit is projected to be around $1.9 trillion. That is potentially a lot of stimulus provided to the private sector through the U.S.'s deficit spending. But is this nearly $2 trillion in "stimulus" really creating $2 trillion in demand for goods and services and will it create similar consequences to what we witnessed in 2022 when inflation spiked? I don't think so.

First, 2021's stimulus was also accompanied by supply factors, as the economy was effectively "shut down" compounding inflationary pressures. In addition, the 2021 deficit included "only" $352 billion in interest expense associated with financing our national debt (now >$40 trillion).

The primary differences between 2021's deficit and 2026's are the facts that supply factors are not present as the economy is able to meet current demand with far fewer impediments and >50% of the deficit now pays for the interest expense on that $40 trillion national debt. Instead of going to individuals in the private sector that might use that $1 trillion in interest expense to demand goods and services, most of that interest expense is going to pension funds, insurance companies, banks, the Fed, foreigners, wealthy people. etc. According to my former INVESCO colleague, Charles DuBois, "only about 10-20% of the interest received is spent into the current domestic economy."   

Consequently, today's roughly $2 trillion deficit is much less stimulative than the $2 trillion deficits from 5-years ago. Chuck estimates that it is "perhaps about $0.6 trillion less stimulative".  Inflation remains an issue, and may worsen should oil shocks materialize during the next several months, but it is not as bad as it could be if we were truly running a $2 trillion annual deficit with most of those $s flowing into the bank accounts of individuals, who like to spend!

DB Pension Plans - Powerful Economic Drivers

By: Russ Kamp, CEO, Ryan ALM, Inc.

For regular readers of this blog or the research published at RyanALM.com, you know that I/we are huge supporters of defined benefit pension plans for many reasons. Not the least is the fact that asking the average American worker to fund, manage, and then disburse a "retirement" benefit with little to no disposable income, no investment acumen, and no crystal ball to help with longevity issues is just silly policy.

Importantly, public defined benefit pensions continue to be a major contributor to economic activity in the U.S. The sheer magnitude of public pensions asset bases (>$6 trillion) and the benefits that they annually pay ($418.3 billion in 2025) make them an economic force. These impressive stats and much more can be found in the Annual Survey of Public Pensions (ASPP) released recently by the U.S. Census Bureau.

The ASPP's annual compendium provides revenues, expenditures, financial assets, and membership information about defined-benefit public pension systems. There is additional detailed actuarial data for state and locally administered defined-benefit public pension systems.

Survey Highlights:

• In 2025, state and local governments invested $6.49 trillion in pension plans, up 8.46% from $5.98 trillion in 2024.
• More than 37 million people (including inactive employees) participated in state and local pension plans in 2025.
• Employees contributed nearly 25%, while governments contributed 75.2% of the total $315.0 billion contributed to state and local government pension plans in 2025.
• State and local government pension plans in 2025 provided $418.25 billion in benefit payments to beneficiaries, up 3.40% from $404.46 billion in 2024. Much of that payment is spent in the recipient's local community creating economic activity and jobs in the process.

Given the magnitude of the economic stimulus that DB pension plans provide, whether they be corporate, public, or multiemployer, they must be preserved and protected. The survey provides myriad statistics at the national level and for individual states. State and locally administered defined benefit plan information is also available. Just click on the link below.

Visit the Annual Survey of Public Pensions webpage for more information.