RBNZ has 'no choice' but to raise OCR in October, BNZ's Stephen Toplis says

Economy / news

ANZ NZ senior economist Matthew Galt says global developments and ‘resilience’ in latest GDP data suggests it would be ‘prudent’ for the Reserve Bank to hike the OCR in October

17th Sep 26, 4:02pm by Mandy Te

A composite image of oil barrels, New Zealand coins and a sledgehammer overlaying textured grid paper.

Composite image source: 123rf.com and interest.co.nz

Stronger-than-expected gross domestic product (GDP) will likely nudge the Reserve Bank towards an Official Cash Rate (OCR) hike in October, ANZ senior economist Matthew Galt says.

Statistics NZ's June quarter GDP figures showed New Zealand's economy grew 0.2% in the quarter. Construction was the leading contributor to the overall GDP increase, with the figures impacted by the Middle East conflict and related fuel price increases.

“Global developments since then [the Reserve Bank's September Monetary Policy Statement] have already been suggesting it would be prudent to hike sooner rather than later, and the resilience shown in today’s GDP data adds further pressure in that direction,” Galt said.

Oil prices have moved sharply higher in the last fortnight, posing renewed inflation risk, Galt said, and the trade-weighted index, measuring the value of the NZ dollar against major trading partners currencies', was also now lower than the Reserve Bank assumed, adding to imported inflation pressure.

The Reserve Bank has previously hinted strongly at a possible pause at the next OCR review on October 28 after increasing the OCR to 2.75% from 2.50% on September 2.

'The Reserve Bank has no choice'

Galt is not alone in his thinking over the OCR with BNZ head of research Stephen Toplis saying things had changed dramatically.

"We were sceptical about the appropriateness of the stance but felt we had to accept the [Reserve] Bank’s intent. The market did likewise in reducing the chance of a rate increase in October to a very low level," Toplis said.

"But things have changed dramatically. So much so that we now think the Reserve Bank has no choice but to raise the cash rate 25 basis points in October," he said, indicating that BNZ was changing its forecast to include an October hike - now projecting 25 basis point increases at each meeting until the OCR reaches 3.75%.

The Reserve Bank is tasked with keeping Consumers Price Index (CPI) inflation between 1% and 3%. In the June quarter it came in at an annual rate of 4.1%.

'Recovery is likely to be patchy'

Galt said the latest GDP data showed a slowdown in growth over the June quarter as fuel prices surged but the economy was more resilient than feared.

“As expected, the details showed second quarter weakness in areas exposed to discretionary spending as higher fuel prices and global uncertainty hit. Accommodation and food services, and transport, postal and warehousing went backwards in the quarter, and growth in retail trade was subdued.”

With GDP data released with a lag, Galt said timely data suggested the economy had grown at a “reasonable pace” in the months since April, May and June.

“However, the recovery is likely to be patchy as ongoing offshore volatility buffets both New Zealand and our trading partners.”

Kiwibank economists Alexandra Turcu and Elliott Lowe also noted the economy fared better than expected, and while it grew a lot slower than it did in the March quarter, they were pleased to see it still growing at all.

“The path forward into the rest of the year will be determined by whether the momentum we seem to have carried forward into June, will continue. In particular, Kiwi shoppers will need to keep filling their baskets, to sustain higher growth rates.”

“The recent up-tick in the oil price will also not be lost on the economic growth outlook for the rest of the year. The economic shock that began in March is still rippling through the economy. Some bigger waves are heading our way once again, with domestic petrol prices jumping up once more," they said.

"You’ll be glad if you fuelled up early in the week."

Meanwhile ASB economist Wesley Tanuvasa said the economic outlook was complex given the multitude of moving parts.

And while the activity starting point is higher, oil prices remain high and volatile, he said.

“We remain a bit nervous of stop-start momentum due to this. Conversely, there could be an underlying feeling of ‘just getting on with it’ given how much of a slog the last three years have been.”

“Looking ahead, it is becoming increasingly unlikely that the global environment will settle in the near term, and this can have opposing implications for year-end growth (down) and inflation (up). New Zealand is worse off from a negative supply shock," he said.

‘It would be prudent to hike sooner rather than later’

The Reserve Bank's Monetary Policy Committee (MPC) is set to make its next OCR decision on October 28 - just 10 days before the election, rounding out the year with another review on December 9.

ANZ's Galt said at the September review, the Reserve Bank was "non-committal" about when the next OCR hike might come but was leaning towards a pause in October.

"However, four of six committee members saw inflation risks as tilted to the upside and developments since then had already been suggesting it might be prudent to hike sooner rather than later.”

“Today’s stronger-than-expected GDP data will nudge the MPC further towards an October hike,” Galt said.

There was more data to come before the MPC’s October meeting “that could yet change the picture”, he said, pointing to the New Zealand Institute of Economic Research’s Quarterly Survey of Business Opinion, which will be released on October 6, and Stats NZ’s Consumers Price Index figures for the September quarter on October 22.

“However, we expect by the time the meeting rolls around, the MPC will conclude that the most prudent course of action is in fact to proceed with getting back to neutral promptly, with a 25 basis point hike.”

'Like doing brain surgery with a sledgehammer'

ASB's Tanuvasa said: “Setting monetary policy during a protracted fuel price shock is a bit like doing brain surgery with a sledgehammer.”

“Hawks and doves will continue to argue about what the optimal policy approach is, but no one can confidently conclude what this is in real time. Even with the fullness of time, this may prove difficult to examine. What we do know is that the RBNZ seemed nervous around the economic recovery in its September MPS.”

“Stronger GDP today helps settle some of those nerves,” he said. “On balance, this supports our view of removing monetary stimulus steadily rather than gradually. We retain our call of a 3.25% year-end OCR, but of course, this view is fickle and has two-sided risks.”

‘Nor will it give them impetus to push the interest [rate] higher any faster’

But Kiwibank’s Turcu and Lowe said; “a slight nudge higher in growth for the economy in the second quarter of the year will not alter the Reserve Bank's resolve to take the interest rate up to 3% by the end of 2026”.

“Nor will it give them impetus to push the interest [rate] higher any faster.”

“Although the positive growth rate will have been a pleasant surprise relative to their 0% growth forecast, the second quarter growth numbers are not a hot reading,” they said.

The reality is the labour market was still weak, there was still substantial spare capacity in the economy and a weak consumer, Turcu and Lowe said.

“A strong result for the construction industry aside, the economic recovery is not fully actualised.”

“All the factors that fed into the Reserve Bank’s September Monetary Policy Statement still hold true. The embers of economic growth are definitely present. With a bit of luck, we could see ourselves building a proper bonfire this time next year.”

‘The NZ economy has enough resilience to cope with those challenges’

Finance Minister Nicola Willis told reporters after the GDP announcement that the latest figures defied expectations.

Asked if she could be confident in the economic recovery continuing given what was happening in the Middle East, Willis said there was some realism about that as recent developments had been concerning and that was being reflected at the pump.

She said there had been increases in oil prices and more instability in the region than anyone would like to see.

“However, all of the advice that I am getting from Treasury and my other advisers is that the New Zealand economy has enough resilience to cope with those challenges, and we should expect that it will be continuing to grow in the present time.”

‘This election is about the cost of living,’ Labour’s Barbara Edmonds says

Labour finance spokesperson Barbara Edmonds said Willis could “spin herself dizzy but New Zealanders know the truth: they’re working harder, but still going backwards”.

“I hear it every day from my constituents. Families are struggling to afford the basics. Wages aren’t keeping up with rising costs. Businesses are closing. These are the direct results of National’s cuts,” Edmonds said.

"This election is about the cost of living, and National has taken New Zealand backwards.”

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20 Comments

by IT GUY | 17th Sep 26, 4:04pm 1789617858

If we want the NZD to stay level at best, yes we need to hike

by Averageman | 17th Sep 26, 7:38pm 1789630705

Yup. Back towards the long term normal.

by Colin Maxwell | 17th Sep 26, 5:26pm 1789622773

WOW - 0.2% Growth!

Isn't there something rather extraordinary about interpreting a 0.2% quarterly increase in real GDP as evidence that the Reserve Bank should be thinking about raising interest rates again.

Even taking the official numbers at face value, this is hardly an economy roaring back to life. Unemployment remains elevated, household spending is weak and the Reserve Bank itself acknowledges significant spare capacity.

And personally, I wouldn't even take the 0.2% at face value.

GDP: The Number That Ate the Economy

The calculation depends heavily on the CPI-based deflator used to turn nominal spending into “real” growth. If the CPI itself understates the erosion of purchasing power, as I believe it does, then the resulting real-GDP growth rate necessarily overstates the amount of genuine economic growth taking place.

On that basis, 0.2% isn't evidence of healthy growth. It is arguably the best-case interpretation of a much weaker underlying economy.

Yet apparently this microscopic number is enough to start talking about making credit more expensive again.

This is an economy producing a barely measurable increase in output while unemployment remains elevated, household spending is weak and the Reserve Bank itself acknowledges there is still significant spare capacity.

Yet apparently 0.2% is now sufficient evidence that we need to make borrowing more expensive?

Treating an Oil Shock with a Mortgage Hammer

Surely the more fundamental problem is what is actually driving inflation.

The Reserve Bank itself says the recent increase to 4.1% CPI inflation was largely driven by higher fuel prices resulting from the Middle East conflict. Strip out vehicle fuels and inflation was 2.9%, and so we have a largely supply-side energy shock being treated with a demand-management weapon.

Oil goes up. Transport costs go up. Production costs go up. Prices rise - and the proposed response is to increase the cost of mortgages, business finance and investment.

That's rather like responding to an electricity-price shock by making electricity more expensive.

The Interest-Rate Paradox

There is also a rather inconvenient feature of interest rates that monetary policy discussions routinely underplay - interest is itself a cost that bleeds instantly into the real economy just as fuel and energy hikes do.

Businesses facing higher financing costs don't necessarily absorb them. They attempt to pass them into prices. Landlords face higher financing costs. Companies face higher working-capital costs. Government faces higher debt-servicing costs.

Yes, higher rates can eventually appear to reduce inflation by suppressing demand and credit creation. But that isn't quite the same thing as saying they have cured the underlying inflationary problem.

As Richard Werner's work has long argued, the more important monetary question is not simply the price of credit, but the quantity and allocation of bank credit, and what that credit is actually doing to the productive economy.

Breaking the Thermometer to Cure the Fever

This is the great circularity in conventional monetary policy.

Raise rates.

Choke credit and demand.

Reduce investment and spending.

Weaken the economy.

Eventually inflation falls.

Then declare that interest rate hikes “worked”. But if inflation has fallen because we have sufficiently damaged demand, what exactly have we cured?

Perhaps the better question is not whether the economy managed to produce 0.2% growth, but whether it is generating enough genuinely productive economic activity to support households, businesses and the debt burden.

If it isn't, another rate hike doesn't represent economic strength. It represents another dose of the same medicine that caused the patient to become sick in the first place.

Perhaps before celebrating a pathetic 0.2% growth, we should make sure we're not simply measuring how slowly the economy is going backwards.

The Strong-Dollar Fallacy

There is also an interesting assumption lurking behind the argument for higher interest rates: that a stronger NZ dollar is automatically good for New Zealand.

Good for whom?

A higher NZD certainly makes imported goods cheaper. But it also reduces the NZ-dollar income received by exporters and makes our tourism and other internationally traded services less competitive. The Reserve Bank itself acknowledges this.

Conversely, the RBNZ says quite explicitly that the weaker NZD is currently supporting exporter revenues - that matters enormously for an economy like New Zealand's.

If monetary policy is tightened partly to defend the currency, we need to ask whether we are protecting the purchasing power of consumers and financial capital at the expense of the people actually earning foreign income for the country.

A weaker currency isn't automatically an economic failure - for an export-dependent economy, it can be precisely the mechanism that transfers income towards the productive, internationally competitive economy.

Perhaps the question shouldn't simply be “How do we keep the NZ dollar strong?”

Perhaps it should be...

“Strong for whom — and at whose expense?”

by Let me be Frank | 17th Sep 26, 7:13pm 1789629196

Perhaps we should make some attempt to improve our trade imbalance?....but then we have gone 40+ years pretending it dosnt matter, so maybe we wont.

Autarky (or as near as possible) has benefits.

by Colin Maxwell | 17th Sep 26, 7:45pm 1789631139

Agreed, Frank - although I would distinguish between improving the trade balance and pursuing autarky.

IMO the deeper problem is that we have spent decades treating the external balance as some secondary accounting statistic rather than as a fundamental constraint on an economy's ability to generate the foreign income needed to pay for what it consumes and the claims it accumulates against itself.

This brings us straight back to the point I was making above about productive economic activity - a lower NZD can actually assist that adjustment by transferring income towards exporters and import-competing production.

Conversely, using higher interest rates to defend the currency can make imports cheaper while simultaneously increasing the financing costs faced by the very businesses we need to expand our productive and export capacity.

So the objective shouldn't be “strong currency at all costs”, nor necessarily autarky - but an economy capable of generating sufficient productive output and foreign-exchange earnings to sustain its own consumption, investment and debt obligations.

But there is a much deeper problem here - as long as the overwhelming majority of our broad money is created through private bank lending, creating new debt claims in the process, we are continually expanding the financial claims against the economy without necessarily expanding its underlying productive capacity by anything like the same amount.

And when that monetary system is dominated by private banking interests extracting interest and other financial rents from the economy, an increasing share of the income generated by the productive sector, is diverted into servicing those financial claims, rather than being reinvested in productive capacity.

That is how an economy can appear to be growing while becoming progressively more hollow underneath.

So yes, Frank - agreed, the trade imbalance matters, but I would argue it is itself part of a much bigger problem - an economic system increasingly optimised for the creation and servicing of financial claims rather than for the creation of the productive capacity needed to support them.

Which brings us back to that rather pathetic 0.2% GDP growth - perhaps the question isn't whether the economy grew by 0.2%, but rather whether or not the economy is actually producing enough real, productive income to support all the financial claims being piled upon it.

by Let me be Frank | 17th Sep 26, 8:17pm 1789633050

And that is where we diverge....I place little faith in currency (fully knowing it is the current article of faith) and consequently consider real output and resources (capacity and capability) the true measure of 'wealth'...though am realistic enough to understand that some level of cross border trade is necessary short of a preindustrial economy

by Colin Maxwell | 18th Sep 26, 11:05am 1789686331

Frank, I actually don't think we diverge nearly as much as you suggest.

I completely agree that real output, productive capacity, resources and capability are the ultimate source of genuine economic wealth. That's precisely the point I was making.

Where I think we differ is in what happens between that productive economy and the enormous financial claims that have accumulated against it.

Currency isn't wealth, but neither can we simply ignore the monetary and financial architecture through which claims on real resources are created, allocated and serviced.

My concern is that we have built a system in which private bank lending continually creates new financial claims, with interest and other financial rents attached to them, without any guarantee that the corresponding expansion of credit will generate anything like a commensurate expansion in productive capacity - that distinction matters enormously.

You can have perfectly adequate physical resources and productive capability while simultaneously having a financial system that has created far more claims against that productive economy than the economy can comfortably service.

That's the issue I was trying to get at with the 0.2% GDP figure. Headline GDP tells us that some additional economic activity occurred. It doesn't tell us whether the underlying productive economy is generating sufficient real income to support the accumulated financial claims sitting on top of it.

So I don't disagree with your starting point at all, Frank. In fact, I would take it one step further.

Real resources and productive capacity are the wealth. The monetary system is the architecture of claims against that wealth.

And increasingly, my concern is that the latter has grown vastly faster than the former.

by Let me be Frank | 18th Sep 26, 4:37pm 1789706272

I agree we are not far apart on the merits of what you propose, though in my mind the difficulty of valuing different currencies remains....however where I suspect we diverge the most is yours is a solution to a system that is no longer valid...and this is where I align with PDK...we need to develop a system that accounts for the fact we are going to have declining output (the end of growth) and that would seem to me to necessitate abandoning interest (return) and inter currency exchange....hence my advocation for Bancor.

by Colin Maxwell | 18th Sep 26, 5:06pm 1789707994

Frank, I think I need to explain what I'm proposing more explicitly, because you still seem to be assuming that abandoning a dominant reserve currency requires replacing it with another supranational currency such as Bancor, SDR, or some such instrument.

I don't think it does.

Imagine China and Saudi Arabia trade with one another throughout the year. Saudi Arabia sells China oil; China sells Saudi Arabia machinery, electronics, vehicles and other goods and services.

There is absolutely no reason every individual transaction needs to be finally settled through dollars, Bancor, gold, or any other third currency.

The transactions can be conducted directly in yuan, riyals, or whatever mutually agreed payment arrangements the parties choose. Modern clearing systems can then continuously net the reciprocal claims against one another.

Suppose, purely for illustration, that after a settlement period Saudi Arabia has sold China the equivalent of $100 billion of goods while China has sold Saudi Arabia $90 billion.

You don't need to settle $190 billion.

You have a $10 billion residual imbalance to settle.

And this is the part I think you're missing: even settling that $10 billion in physical gold does not require $10 billion of gold to be loaded onto an aircraft and flown from China to Saudi Arabia.

Gold can remain securely stored in an agreed vault or network of accredited vaults. What changes is legal title to a specified quantity of allocated physical bullion.

China's account might previously have owned title to, say, X tonnes stored in an agreed repository. Following settlement, ownership of the required quantity is transferred to Saudi Arabia. The bullion itself may not move a centimeter.

The electronic ledger records the change of ownership- the physical gold provides the ultimate, non-national asset behind that settlement.

And because that gold is allocated physical bullion rather than somebody else's debt instrument, Saudi Arabia has acquired an asset rather than a promise from China, the United States, a supranational clearing institution or anybody else.

If Saudi Arabia subsequently runs a deficit with India, some of that title could potentially be transferred again. Once again, the bullion need not physically move.

This is precisely where modern technology changes the historical limitations of gold.

Gold once presented obvious problems when enormous volumes of international commerce required physical movement, assay, verification and cumbersome settlement. Digital ownership records, high-security internationally distributed vaulting, instantaneous communications and sophisticated clearing and netting systems radically reduce those limitations.

And gold needn't necessarily be the only final settlement asset. Countries could mutually agree to use other durable strategic commodities, or contractual claims upon them, where that makes economic sense.

I'm describing something quite new...

Direct trade → continuous clearing and netting → periodic settlement of residual imbalances → transfer of ownership of mutually acceptable real reserve assets.

No dominant national reserve currency is inherently required - on Bancor, SDR, or whatever else they choose to call it, is either.

And crucially, physical settlement does not necessarily mean physical movement.

That's why I think we're discussing two different monetary paradigms. You're trying to design a replacement international currency.

I'm questioning why the 21st-century world necessarily needs one at all.

by Let me be Frank | 18th Sep 26, 7:48pm 1789717693

I believe I understand what you are proposing and I still question how you will arrive at a valuation, or even how you will prevent arbitrage...what mechanism exists to provide an agreed and consistent currency valuation...please do not tell me gold or any other commodity because ultimately they are valued in a currency.

by Colin Maxwell | 18th Sep 26, 8:53pm 1789721593

Frank, this is precisely where I don't think you do understand what I'm proposing.

I will make one final attempt.

You keep asking what authority or mechanism will establish an "agreed and consistent currency valuation".

There doesn't need to be one. The market does it continuously.

Currencies already trade against one another. Commodities already trade against currencies. Commodities trade internationally against one another indirectly through those markets. Prices are continuously discovered through millions of transactions.

And arbitrage isn't some fatal flaw that has to be prevented. Arbitrage is actually one of the mechanisms that keeps prices between different markets aligned.

Take an absurdly simplified example. Suppose one ounce of gold trades for 30,000 yuan in one market and 15,000 riyals in another. That establishes an implied relationship of:

30,000 yuan = 1 oz gold = 15,000 riyals

Therefore the implied cross-rate is 2 yuan per riyal. Nobody has to declare that exchange rate from on high. And gold doesn't somehow acquire its value from either currency merely because somebody expresses its price in yuan or riyals.

That's confusing the unit in which something is quoted with the thing determining its relative value. A house doesn't derive its economic value from the New Zealand dollar simply because its price is quoted in NZ dollars. Nor does a tonne of copper, a barrel of oil, a bushel of wheat or an ounce of gold. Their relative exchange values emerge through markets.

Now if we return to my China/Saudi example.

They conduct enormous volumes of trade directly. Yuan and riyal exchange rates fluctuate. Oil, machinery, gold and everything else also have continuously changing market prices. At the end of an agreed accounting period, the reciprocal claims are netted.

Suppose Saudi Arabia is then owed purchasing power equivalent at prevailing market prices to 100 tonnes of allocated gold. China transfers title to 100 tonnes.

That is the settlement.

The gold doesn't have to be "worth dollars". Dollars have absolutely nothing to do with the transaction. Nor does the gold necessarily move anywhere. Legal ownership of allocated bullion changes on the ledger.

Saudi Arabia can subsequently retain that gold as a reserve asset, exchange it for goods, sell it for yuan, rupees or reais, or transfer title to somebody else when settling another imbalance. And if markets temporarily produce inconsistent relative prices between gold, yuan, riyals and other assets?

Arbitrageurs have an incentive to exploit those discrepancies until the relationships converge again.

That is price discovery, not a failure of the system.

The fundamental distinction I keep trying to make is between three entirely different things...

1. Unit of account — what you choose to express a price in.

2. Medium of exchange/payment — what is used to conduct transactions.

3. Final settlement asset — what ultimately extinguishes the residual claim.

They don't have to be the same thing. The dollar-centric system has conditioned us to think they somehow must be because the USD has simultaneously performed several of these roles internationally. I'm questioning that assumption itself.

China and Saudi Arabia don't require Bancor to tell them what an ounce of gold, a barrel of oil, a yuan or a riyal is worth relative to everything else. Markets can discover those relationships continuously. And modern technology allows the resulting transactions to be cleared and netted electronically, leaving only the residual imbalance requiring final settlement.

That is the entire point.

I am not proposing another international currency system. I am proposing that we may no longer need an international reserve currency at all.

by Marcus Traddles | 18th Sep 26, 7:50am 1789674637

You raise some interesting points, especially re. the deflator. Growth of 0.2% is derived via various surveys and an accurate deflator, which is asking a great deal. As in the UK, the GDP data are referred to as Gospel, when they are anything but. The stats body should say - as far as we can determine the economy was close to stable in 2026 Q2.

There is also the question of GDP per capita. How is that doing in NZ?

Also, what is Government's role in GDP growth?

Finally, what is the role of household debt? If an economy increases by say $10bn in one qtr, and net household debt increases by $10bn, to what extent is that growth?

As Peter Drucker noted - there are three types of growth - muscle, fat, and cancer.

by Colin Maxwell | 18th Sep 26, 11:11am 1789686714

Muscle, Fat and Cancer - you nailed it Marcus!!!

I think Drucker's distinction is particularly pertinent here.

It also reinforces the point I was trying to make to Frank. The issue isn't simply whether there is growth, but what is actually growing.

An economy can increase its measured GDP while productive capacity is stagnating, household and government debt are expanding, and an ever-larger share of future income is being pre-committed to servicing accumulated financial claims.

That isn't necessarily “growth” in the economically meaningful sense.

And your household-debt example gets right to the heart of it. If GDP rises by $10bn while household debt rises by $10bn, we should at least ask what portion of that apparent growth represents an expansion of genuine productive capacity and what portion represents bringing future consumption forward through additional borrowing.

Which brings us neatly back to the 0.2%.

Perhaps the more useful question isn't “Did GDP grow?” but:

“What grew, what financed that growth, and what productive capacity was created to support the additional claims?”

by Let me be Frank | 17th Sep 26, 5:24pm 1789622663

The world is increasingly avoiding US gov debt...do the previous mantras apply?

by JimboJones | 17th Sep 26, 7:14pm 1789629261

They are a rich country, there really is no need for government deficits except greed.

by Let me be Frank | 17th Sep 26, 7:38pm 1789630735

They are indeed rich, but neither as rich as some would like nor as rich as they once were.

by interesting1234 | 18th Sep 26, 8:50am 1789678237

They are only as rich as 1./ their own natural resources and manufacturing capability without any input from foreign nations goods or services and 2./ their ability to extract resources form other nations for their own benefit (irrespective of the method of doing so) and 3./ Their populace abiding to the rule of law which will tie in with their faith that their govt and systems are credible and worth abiding by.

by Let me be Frank | 18th Sep 26, 8:56am 1789678612

Agree with 1 and 3...not so much 2. We appear to have made similar points simultaneously.

by Colin Maxwell | 17th Sep 26, 8:49pm 1789634999

"Rich"?
A country which:

• Imports substantially more goods and services than it exports
• Runs a trillion-dollar-plus annual current-account deficit
• Has a deeply negative NIIP
• Carries an enormous stock of government debt and future unfunded obligations

On the fiscal balance sheet, the numbers get very uncomfortable. Truth in Accounting's 2026 analysis of the federal government's audited financial report estimates $170.3 trillion in total promised benefits/liabilities, equivalent to about $1.1 million per federal taxpayer. Their 2025 analysis had put the figure at $158.6 trillion, or $974,000 per taxpayer.

There are different methodologies and definitions of "unfunded liabilities"; one recent estimate explicitly puts national debt plus unfunded mandates at approximately $1.3 million in 2025 per taxpayer.

A country can have enormously wealthy individuals, corporations, property and financial assets while simultaneously running persistent external deficits and accumulating claims against its future income.

The US has been able to sustain an extraordinary trade deficit for decades because of the unique international role of the dollar and the enormous demand for US financial assets - I don't think any of us should confuse this as evidence that the underlying external balance sheet is healthy.

by Let me be Frank | 18th Sep 26, 8:54am 1789678480

It is a large landmass with (still) significant resources and organised (now less so) population and institutions....rich, but becoming less so, indeed they appear hellbent on destroying those resources.