Anne Tergesen

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4,485 appearances 83 recordings 1 series first heard Jul 2017 last heard Feb 2025

Anne Tergesen’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Social Security Recipients on Track for a Smaller Raise Next Year · 16 Sep 2024 podcast

recession on the order maybe of something even worse.

So broad-based deflation isn't something that we should want to see.

So in fact, the inflationary spike we've had since the pandemic is baked in at this point, barring something like some economic calamity that would cause prices to go down.

So we're sort of permanently stuck at higher price level in general.

Overall, the way to get out of that, the way to make life more affordable is for wages to go up.

So that's where the COLA is important because the objective with the COLA isn't to give people a raise.

You know, when you're in the workforce, you might get raises and some of those raises are intended to keep you on a par with inflation so that you're not losing ground economically.

However, of course, sometimes there are merit raises or promotions, and those raises can take you to the point where you're getting an improvement in your cost of living.

The COLA is not intended as akin to a merit raise.

It's intended to keep retirees from losing ground to inflation.

So what happens then is that that will then get baked into next year's calculation because that'll raise the price level such that when they go next July, August, and September's data will incorporate that higher price level, will reflect it.

So in effect, the COLA catches up over time.

When inflation is rising, the COLA often lags a little bit.

But when inflation is going to a lower level,

rate of increase, which is what we're seeing now, then sometimes the opposite can happen and the COLA can overcompensate people because it's catching up for that reason you laid out.

Yeah, the COLA doesn't always perfectly keep up with inflation in the moment.

But over time, it will catch up generally, if not the next year, the year after.

There's a mechanism where it basically catches up over the inflationary cycle.

If you're a retiree who, theoretically, if your entire retirement income is Social Security, then your income has kept pace with inflation over the last couple of years.

Maybe not perfectly, maybe not every year in a perfect way, but it catches up over time.

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