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Unless you’ve been living underneath a rock, you’ve undoubtedly read or heard something about “The Coming Pension Crisis.” Let’s begin with a number to put it into perspective.


(That’s two trillion with a capital “T.”)

That figure represents the amount of unfunded pension liabilities currently sitting on the books of state and local governments.


This number is a mirage. The real problem could actually be far bigger.

“That assumes an average 7% compound return,” says visionary thinker and best-selling author John Mauldin, who recently joined Hedgeye Founder/CEO Keith McCullough for an exclusive conversation. If you assume 4% compound returns the unfunded pension liability balloons to $4 trillion, Mauldin says. What if we land ourselves in a recession and stocks fall more than 40%?

Now you have an unfunded liability in the range of $7–8 trillion,” Mauldin explains.

While Mauldin says the U.S. appears to be “chugging along” just fine right now, the implications for the U.S. economy lugging around all this debt could be dire when the next recession does hit.

“I think because of the debts in this country, public and private together, that the recovery from the next recession is going to be even slower,” Mauldin says. “That’s because debt is a drag on growth. There’s no question about it and all of the data points that way.”

Click here to watch the entire interview. Mauldin tackles everything from the Fed’s extraordinary monetary experiments to the “pension crisis tipping point” to how driverless cars might severely impact the U.S. jobs market.

Mauldin: The Alarming Pension Crisis Math - investing ideas