The COLA Game
Posted 09-24-2012 at 08:46 AM by Mircea
Once again, it's COLA Time. The concerns those people who are receiving OASI/OADI benefits or perhaps you who know someone receiving benefits.
It's also important to those who are caring for aging parents or other family members, and may [also] be responsible for their finances.
And let's not forget those people who are engaging in Elder Abuse, because, you know, they'll want to know if they have more money to spend.
COLA -- the Cost-of-Living Adjustment -- is fairly straight forward. The key is using the correct data.
There are several Consumer Price Indices calculated for different reasons. Make sure you are using the CPI-W -- the Consumer Price Index for Urban Wage Earners and Clerical Workers.
You want the "unadjusted" data, not the "seasonally adjusted" data. In fact, when looking at "things economic" you should always use the raw data instead of someone's fantasized idealized version of what the data ought to be (because it looks pretty on a graph with straight lines an all).
On Tuesday, October 16, the BLS will release the CPI-W for September. It's embargoed until 8:30 AM. That's too early for me; I like to get up when the Sun is warm, like around noon. So it will be up to you people to see what the COLA increase will be. Look toward the bottom of the page to find the unadjusted CPI-W. Well, not the bottom of the page, but rather the very last part of the main text.
Social Security also provides Monthly CPI-W data, but I don't know if there's a lag time -- meaning maybe the clowns at Social Security don't get round to putting it up to later in the week.
Monthly CPI-W is given here…
Consumer Price Index (CPI-W)
If you’re not in the mood to do a lot of work, you can get the quarterly averages here…
Average CPI-W, by quarter and year
We compare the average unadjusted CPI-W for the 3rd calendar quarter with the average unadjusted CPI-W for the last year in which a COLA was authorized, and then find the percentage increase (if any).
(Avg CPI-W 3rd Quarter - Avg CPI-W Last Authorized COLA) / Avg CPI-W Last Authorized COLA x 100 = % COLA Increase.
That's the formula.
The average CPI-W for July and August is presently 226.312. The average CPI-W for 3rd Quarter 2011 was 223.200 so we'll plug those into the formula just for fun...
= (226.312 - 223.200) / 223.200 * 100
= 3.112 / 223.200 * 100
= 0.0139 * 100
= 1.39%
= 1.4%
That's where it stands now.
The unadjusted CPI-W for September must be greater than...
223.750
.....in order for there to be a 1% COLA increase. My understanding of the law (someone correct me if I'm wrong) is that COLA is authorized only if it is greater than 1%, so a 0.6% increase means no COLA.
The following CPI-Ws yield the following percent increases in COLA...
227.020_____1.5%
230.368_____2.0%
233.716_____2.5%
237.064_____3.0%
240.412_____3.5%
243.760_____4.0%
I'm not going to calculate every 1/10th of 1% (but I'm sure the obsessive compulsive and anal retentive will).
I'm casually predicting 229.029 for CPI-W September with a COLA increase of 1.8% effective December showing up in the January checks or I suppose January EFTs for those with Direct Deposit.
"Causally" because I didn't actually pull up all the numbers....it's a lot of time.
Costs are either flat or trending up, and I noticed that the Real Wages declined yet again, so I'm confident CPI-W increased.
In fact, Real Wages have declined 1.3% since 2010....
But then we already knew that wages were flat due to global competition and high unemployment in the US.
Economic News Releasesrealer.nr0.htm
It's also important to those who are caring for aging parents or other family members, and may [also] be responsible for their finances.
And let's not forget those people who are engaging in Elder Abuse, because, you know, they'll want to know if they have more money to spend.
COLA -- the Cost-of-Living Adjustment -- is fairly straight forward. The key is using the correct data.
There are several Consumer Price Indices calculated for different reasons. Make sure you are using the CPI-W -- the Consumer Price Index for Urban Wage Earners and Clerical Workers.
You want the "unadjusted" data, not the "seasonally adjusted" data. In fact, when looking at "things economic" you should always use the raw data instead of someone's fantasized idealized version of what the data ought to be (because it looks pretty on a graph with straight lines an all).
On Tuesday, October 16, the BLS will release the CPI-W for September. It's embargoed until 8:30 AM. That's too early for me; I like to get up when the Sun is warm, like around noon. So it will be up to you people to see what the COLA increase will be. Look toward the bottom of the page to find the unadjusted CPI-W. Well, not the bottom of the page, but rather the very last part of the main text.
Social Security also provides Monthly CPI-W data, but I don't know if there's a lag time -- meaning maybe the clowns at Social Security don't get round to putting it up to later in the week.
Monthly CPI-W is given here…
Consumer Price Index (CPI-W)
If you’re not in the mood to do a lot of work, you can get the quarterly averages here…
Average CPI-W, by quarter and year
We compare the average unadjusted CPI-W for the 3rd calendar quarter with the average unadjusted CPI-W for the last year in which a COLA was authorized, and then find the percentage increase (if any).
(Avg CPI-W 3rd Quarter - Avg CPI-W Last Authorized COLA) / Avg CPI-W Last Authorized COLA x 100 = % COLA Increase.
That's the formula.
The average CPI-W for July and August is presently 226.312. The average CPI-W for 3rd Quarter 2011 was 223.200 so we'll plug those into the formula just for fun...
= (226.312 - 223.200) / 223.200 * 100
= 3.112 / 223.200 * 100
= 0.0139 * 100
= 1.39%
= 1.4%
That's where it stands now.
The unadjusted CPI-W for September must be greater than...
223.750
.....in order for there to be a 1% COLA increase. My understanding of the law (someone correct me if I'm wrong) is that COLA is authorized only if it is greater than 1%, so a 0.6% increase means no COLA.
The following CPI-Ws yield the following percent increases in COLA...
227.020_____1.5%
230.368_____2.0%
233.716_____2.5%
237.064_____3.0%
240.412_____3.5%
243.760_____4.0%
I'm not going to calculate every 1/10th of 1% (but I'm sure the obsessive compulsive and anal retentive will).
I'm casually predicting 229.029 for CPI-W September with a COLA increase of 1.8% effective December showing up in the January checks or I suppose January EFTs for those with Direct Deposit.
"Causally" because I didn't actually pull up all the numbers....it's a lot of time.
Costs are either flat or trending up, and I noticed that the Real Wages declined yet again, so I'm confident CPI-W increased.
In fact, Real Wages have declined 1.3% since 2010....
Quote:
Real average hourly earnings for all employees fell 0.7 percent from July to August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today.
This decline resulted from unchanged average hourly earnings combined with a 0.6 percent increase in the Consumer Price Index for All Urban Consumers (CPI-U). Real average weekly earnings fell 0.6 percent over the month due to the decline in real average hourly earnings combined with an unchanged average workweek.
Since reaching a peak in October 2010, real average weekly earnings have fallen 1.3 percent.
This decline resulted from unchanged average hourly earnings combined with a 0.6 percent increase in the Consumer Price Index for All Urban Consumers (CPI-U). Real average weekly earnings fell 0.6 percent over the month due to the decline in real average hourly earnings combined with an unchanged average workweek.
Since reaching a peak in October 2010, real average weekly earnings have fallen 1.3 percent.
Economic News Releasesrealer.nr0.htm
Total Comments 0
