Very early numbers suggest that there may be little or no Cost Of Living Adjustment (COLA) for Social Security benefits this year.
7 comments:
Anonymous
said...
This is based on 3 months of data, and the reason the CPI has dropped is because of drops for energy and food, which are the most volatile components. The core inflation, which excludes food and energy, was up 0.2% (seasonally adjusted) each month of the 4th quarter, which is a 2.4% annual rate. So there is still a reasonable change for a decent COLA, which would just require that the volatile components reverse themselves, which they often do. Of course, they might not - it's too early to tell.
However, as I've written before, if prices (as experienced by people on Social Security) actually go down and there is no COLA, that is a good thing, because in that case the real value of Social Security benefits increases (as opposed to staying the same, which is what COLAs are designed to do). Why do people think a bigger check is better if it is the result of prices being higher?
It's very,very early. The December figure for the CPI-W was about 0.63% below the 2018 3rd quarter average, or about 99.37% of the 3rd quarter average. Much too early.
to 8:06 AM, I will tell you why...because the COLA is based on the difference in CPI in only 3 months, July , August, and September (from the previous year). Personally I would like to see prices go through the roof for those 3 months and then come down, as it is better for me and most. Then, the next COLA would hold more value because you are increasing a higher amount benefit to begin with.
To 4:02 AM. Sure, it would be good if the CPI was high in July, August and September (and growing each year from the previous values) but stayed low the rest of the year. But that is not going to happen in the long run. It can happen occasionally - in 2008, prices increased a lot, peaking in the third quarter, so there was a 5.8% COLA. But the run-up then reversed itself, and there was no COLA for the next two years. So if prices "go through the roof ... and then come down," you will get a high COLA one year and then probably low (or no) COLAs. On average, the COLA is going to increase about as much as the CPI. Almost the only case in which it would not would be sustained deflation (negative inflation) which would give 0% COLAs but dropping prices. Of course, this is unlikely, unless we have a depression.
7 comments:
This is based on 3 months of data, and the reason the CPI has dropped is because of drops for energy and food, which are the most volatile components. The core inflation, which excludes food and energy, was up 0.2% (seasonally adjusted) each month of the 4th quarter, which is a 2.4% annual rate. So there is still a reasonable change for a decent COLA, which would just require that the volatile components reverse themselves, which they often do. Of course, they might not - it's too early to tell.
However, as I've written before, if prices (as experienced by people on Social Security) actually go down and there is no COLA, that is a good thing, because in that case the real value of Social Security benefits increases (as opposed to staying the same, which is what COLAs are designed to do). Why do people think a bigger check is better if it is the result of prices being higher?
It's very,very early. The December figure for the CPI-W was about 0.63% below the 2018 3rd quarter average, or about 99.37% of the 3rd quarter average. Much too early.
to 8:06 AM, I will tell you why...because the COLA is based on the difference in CPI in only 3 months, July , August, and September (from the previous year). Personally I would like to see prices go through the roof for those 3 months and then come down, as it is better for me and most. Then, the next COLA would hold more value because you are increasing a higher amount benefit to begin with.
To 4:02 AM. Sure, it would be good if the CPI was high in July, August and September (and growing each year from the previous values) but stayed low the rest of the year. But that is not going to happen in the long run. It can happen occasionally - in 2008, prices increased a lot, peaking in the third quarter, so there was a 5.8% COLA. But the run-up then reversed itself, and there was no COLA for the next two years. So if prices "go through the roof ... and then come down," you will get a high COLA one year and then probably low (or no) COLAs. On average, the COLA is going to increase about as much as the CPI. Almost the only case in which it would not would be sustained deflation (negative inflation) which would give 0% COLAs but dropping prices. Of course, this is unlikely, unless we have a depression.
in other words, beneficiaries (those living on a 'fixed' income) will get the same COLA as employees got this year...0.
12:14 no you got the same 1.9% inflation loss the reps cry about.
;)
We won't know because the government can't figure this out with the shutdown.
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