Social Security’s 2027 cost-of-living adjustment (COLA) will be especially pronounced in 10 states.
Social Security’s 2027 cost-of-living adjustment (COLA) will be especially pronounced in 10 states.
Few announcements are more anticipated by Social Security's nearly 55 million retired-worker beneficiaries than the annual cost-of-living adjustment (COLA). Social Security's COLA represents the near-annual raise passed on to beneficiaries to offset the inflation (rising prices) they've faced over the last year.
Social Security's 2027 COLA, announced on Oct. 14, is among the largest over the last 35 years, thanks in part to President Donald Trump and elevated inflation, which has been fueled, in part, by his policies.
For retired workers in 10 select states, the fifth-largest raise since 1993 will deliver outsize nominal-dollar increases to their monthly payouts.
Inflation is a common occurrence when the U.S. economy is expanding. When the economy is growing, it's normal for businesses to have some degree of pricing power over their goods and services.
However, persistently elevated inflation lifted Social Security's 2027 COLA to 3.6%. It's the largest raise since 2023, and represents a tie for the fifth-largest COLA over the last 35 years.
Though the artificial intelligence infrastructure build-out has contributed to above-average inflation, 2027's historic COLA is primarily the result of a "Trump bump." Two of President Trump's policies -- tariffs and the Iran war -- have directly lifted consumer prices.
New from the New York Fed: "By February 2026, tariffs had contributed 2.9 pp to goods price inflation, and without them goods prices would have fallen slightly." About one quarter of every point in higher tariff rates shows up in consumer prices within one year. • A 10% across-the-board tariff yields a 2.6% rise in consumer goods prices after one year. • About two thirds of the increase comes from pricier imports, which get passed through quickly. • Another third comes from U.S. made goods, as producers face higher input costs and less import competition. This takes longer, about 6-12 months, to filter through.
According to a new report by three New York Federal Reserve economists writing for Liberty Street Economics ("How Fast Do Tariffs Pass Through into Consumer Prices"), it was estimated that Trump's tariffs added 2.9 percentage points to goods prices by February 2026.
Likewise, the Iran war has led to the largest energy supply disruption in modern history, sending fuel prices skyrocketing.
Averytin News Financial update.