Next Year’s COLA? Likely to Disappoint - Motley Fool

The media were all agog when the 2023 Cost of Living Adjustment (COLA) was announced last fall. After all, the 8.7% COLA increase was historic – an increase at a level not seen in over 4 decades. Of course, the reason 2023 COLA increase was so high is due to soaring inflation in 2022 which, although providing only after the fact relief for already higher prices, at least somewhat offset this year’s higher prices. But COLA is determined using year-to-year inflation, which means that the 2024 COLA increase will be based on how the 2023 third quarter Consumer Price Index compares with the 2022 third quarter index. And initial projections for 2024 COLA are not looking good. All indicators are that inflation is easing and that a recession may very well be on the horizon later this year. It those projections hold true, resulting in very low inflation or even “deflation” (negative inflation), it’s probable that the COLA increase will likely be very small, or perhaps even non-existent, as was the case in 3 of the previous ten years. All of this is laid out in an article by Sean Williams appearing at the Motley Fool. Click here to read more.

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