Another Look at C.O.L.A.

 

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Back in August I stated... somewhere between 8.6% ~ 9.0%. Clearly, a revision has taken place. Largely due to the continued drop in gasoline. 

If you remember the July CPI report, it stated the -7.7% gasoline number held off all the price increases in everything else. August is over and I am betting the August CPI will be -10% for gasoline. 

Of course, the C.O.L.A. is based on CPI-W, which slipped -0.1% in July and was 9.1% over the year.  -10% in gasoline would in theory... create an even lower number than -0.1%. Granted, the other stuff may be accelerating inflation wise, but I am not so sure about that. 

In any case, I suspect the CPI-W will be in the range as noted and the monthly change will be -0.3%~0.5%.

That would be stellar, except it is only gasoline and many other things like food, electricity, and heating bills are rising... going into that time of year. A lump of coal might be a welcome gift, come Christmas. (Hey, everything else has gone topsy turvy... why not?)

For the record, the C.O.L.A. announced in fall 1981 for 1982 year was 11.4%. The fall of 1982 announcement for year 1983 was 7.4%. This year's announcement should be between those two numbers.

And for the first time in a long while, there should not be much of an increase in Medicare B premiums. Mostly because we were over charged last year, but still, taking them at their word of that drug being half of last year's rise, and then they found out that drug was half the original price... we end up back to where we currently are for next year. That $60 we got over charged this year will be metered back to us this coming year. 

Is It Still Too Early to Predict C.O.L.A.? And Some Other Observations...

I've had to revise downward, my previous forecast... by quite a bit. I am okay with that, as longing for inflation to continue upward, with the hopes of a higher check in the future... seems rather silly, imo.

While headline CPI was 0% for the month to month, the CPI-W declined -0.1%. Both were largely a product of the decline in energy, specifically gasoline. Gasoline has already fallen on this date, by similar numbers as July. Which will be more than enough to offset the rise in groceries (more later on groceries). Gasoline should fall a bit further over the next week, but seems to be set to stabilize.

It might even offset any expected increases in "core" inflation. My August projection in the chart is for a range of -0.2% ~ +.01% month to month for CPI-W.  September CPI-W ranges from -0.3% ~ 0.0%. So while the chart plots the C.O.L.A. increase range as 8.6%~9.0%, the lower number is much more likely, imo.

So call me suspicious of "non-partisan" groups that have headlined the potential for 10%+ S.S.A. C.O.L.A. and their adoring "journalists" that published this information for seniors on Social Security to read. To get 10%+, you have to have at least one month above 10% and likely 2. We haven't had even one. 

It does make me wonder what the aim of those "reports" were? Further divisions? Which brings me to politics. One side of the aisle plays up the 0.0% change in M/M and the other side reminds us, it is still 8.5% Y/Y.

I may sound like the latter, given what I am about to say. But first, another chart (BLS sourced, except projections)...

When I earlier mentioned a near repeat of July's numbers for August, I was not kidding. Which brings me to food... something I rather enjoy. It also brings up the looming food insecurity and a phenomena called "hangry" . The latter of which is a smash-up of hungry and angry.

August's food at home will most likely be +14.3% Y/Y. How can I say this? This is the PPI (BLS) from July and while it was down -0.5%, that did not mean everything went down. NO! It did not!

Somehow I believe, some of this will get passed on. It is already an issue on the websites I frequent, just as gasoline prices were. Were, as in it has shifted to lower pump prices, but still unhappy, as it isn't what it was 1 year or 2 years ago. So remember the 2.0% finished consumer goods, one month jump of the PPI. It is coming to a home near you.

Food is becoming more and more the topic, with many expressing some form of hardship. What intrigues me, is they are still hanging on to their smart phones, internet connections, etc. 

However, there are people that either haven't had any of those items or have had to cut back. People do change their spending habits for one reason or another, but keeping food on the table is rather constant, imo. 

I am referring to the USA in this instance, as I cannot imagine the hardships being foisted on a large swath of the population in Europe. And as food is a global commodity... the rest of the world as well. Seriously, I cannot fathom what it is like in some areas of Africa where food scarcity is the issue.

Food scarcity... lack of basic nutritional food.

Food insecurity... inability to afford basic nutritional food.

We have enough angry people in the USA, without increasing food insecurity and making even more people angry or hangry. 

Which goes to show a tried and true historical method is once again being used. Our "elected leaders", "corporate masters", and their "media shills" must ensure we are blaming each other, rather than focusing on the real problem... which is "them".

I'm sure we will be informed how things are "looking up" or the "sky is falling". Most likely all spin, just like water circling the drain.  

Whew! I got that off my chest! Time for a nap?