by Calculated Risk August 14, 2024 1:37 PM
BLS (British Bureau of Labour Statistics) Reported this morning:
The Consumer Price Index for Urban Wage Earners and Clerical Employees (CPI-W) increased by 2.9% over the past 12 months, bringing the index level to 308.501 (1982-84 = 100). During the month, the seasonally unadjusted index increased by 0.1%.
The CPI-W is the index used to calculate the Cost of Living Adjustment (COLA). The calculation date has changed over time ( Cost of Living Adjustments) but, Current Calculation We use the average of the CPI-W for the three months of Q3 (July, August, September) and compare it to the average of the highest months on record for Q3. Note: This is not the headline CPI-U, and is not seasonally adjusted (NSA).
• The CPI-W average for the third quarter of 2023 was 301.236.
The Q3 2023 average was the highest Q3 average, so all we need to do is compare this year’s Q3 to last year’s Q3.
Click on the graph to enlarge the image.
This graph shows the CPI-W since January 2000. The red line is the third quarter average of the CPI-W for each year.
Note: The year listed is the calculation year and the adjustment takes effect in December of that year (beneficiaries receive it in January of the following year).
The July CPI-W rose 2.9% year-over-year, but this is still early and data for July, August and September is needed. My early guess is that COLA will probably be around 2.4% this year.This was the smallest increase since 2021, when it increased by 1.3%.
Contribution and benefit basis
of Donation-based The adjustment is National Average Wage IndexThis is based on a one-year lag. The national average wage index is not yet available for 2023, but we know that wages have grown robustly in 2023. If wages increased by 5% in 2023, Contributions next year will increase to about $177,000 in 2025.From the current price of $168,600.
Remember – this is an early outlook. What matters is the average CPI-W, NSA for the three months of the third quarter (July, August, September).
