Wednesday, May 13, 2020

How Social Security Recipients Are Damaged Big Time Because of the Trump-Powell Money Printing

As things stand now, Social Security beneficiaries might not receive much of a cost-of-living adjustment next year. COLA is linked to the consumer-price index but that is underplaying big time what is happening to prices that are important for seniors.

The CPI declined 0.8 percent in April, meaning there was no upward adjustment for the COLA based on the April number. BUT, at the same time the overall CPI fell, the prices for food at home increased in the month of April alone by 3.5%, certainly a staple that seniors can't eliminate. The price advances in food and other staples are a combination of supply bottlenecks during the lockdown and massive money printing encouraged by President Trump and executed by the chairman of the Federal Reserve Board, Jay Powell.

I expect the overall CPI to start climbing over the next month or two but it will still lag behind the basics as the basics are the focus of buying during this period of COVID-19 panic.

Whatever the final COLA adjustment comes in at the start of next year, I expect it will result in a loss in buying power of around 10% for seniors.

This is not a new trend.

Mary Johnson, a Social Security policy analyst for The Senior Citizens League told MarketWatch that "in total, Social Security benefits have lost 30% of buying power since 2000."

It is just that the severity of the buying power decline will be much more severe on a one-year basis after this year is over.


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