When one is on Social Security, their “raise” or cost of living adjustment, is usually tied in to a federal measurement called the Consumer Price Index or CPI.

So, when one looks at the CPI measurement coupled with Social Security recent 2020 announcements show, in our opinion, national troublesome wage stagnation while enjoying a helium balloon type economy. First, a little back history.  CPI measurements showed in 2012 that the CPI, was 3.6 percent, the highest in several years prior. Since 2012, the measurement has continued to trickle down.

In 2018, the CPI was at two percent. Our new government hailed that number. Even The Federal Reserve Board once said that they were going to let this “two percent” number influence inflationary monetary policy. From 2012 to 2018, the CPI went down 45 percent.

In 2019, according to the U.S. Social Security Administration, recipients received a 2.8 percent increase. Oh shoot, it went up to 29 percent.

But one can also say that in those total seven years, from 2012, even with the increase, the CPI, or inflation has gone down 23 percent.

But now comes the real interesting part. The U.S. Social Security Administration has announced the annual Social Security increases for 2020. Get ready 1.8 percent.

Yes, let me say it again: 1.8 percent. Let me say it another way: A year over year decrease of 3.6 percent.

Has food gone down that much year over year? How about your rent? Your transit?

Now while, of course, wages have not gone down by that amount, this is why they will not go up. We might like low inflation as consumers, but we may not like it as wage earnings looking for that annual raise or bonus, just like elders have not seen it in their Social Security checks.

So looking at the Obama/Trump economy through cost-of-living adjustments we see troublesome signs for people living in a fixed income. This non-inflationary income, coupled with technology, will allow for reasonable but still low-paying jobs. Yes, jobs are out there in full, but not the kind your mom, dad, or college might have told you about.

Some might call this Supply Side economics, part two. Ask grandma, who’s probably on Social Security. If they yell out the name Ronald Reagan, then they could be 100 percent correct. After all, Ronald, 35 years ago, created Supply Side, part one. They will tell you that we had the biggest non-inflationary boom in our county ever, and they are right, but because the economy blew up with helium not growth, the growth never translated to wage or Social Security increases

In 1981, our economy was growing at a 2.5 percent rate. By 1986, it was growing at a 3.5 percent clip, or over a 33 percent rate for five years.

So, let’s get back to the origin of the story, reading our economy through Social Security

If this economy does not start to put together some real growth soon, future seniors, yes maybe you, are going to have a big wallet with a lot of gas! 

Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The Bronx News, thisisthebronX.info and The Bronx Chronicle. Mr . Rivieccio also pens a financial article called “Money Talk”. Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. Financial Focus Interactive is now an app and a place where one can: Read, Listen, Watch Talk & Learn about Financial Solutions with like minded people and a live financial advisor. Financial Focus Interactive app can be found on the Google Play Playstore or on or internet app at: https://www.financialfocus.app For financial assistance, Anthony can be reached at (347) 575-5045.