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Cost of Living Adjustment Update: 6/16

June 16, 2022 Disability

COLAnow as of 6/16/22: After the May 2022 CPI-W release, COLAnow is projecting a 12.92% Cost of Living Increase (COLA) beginning January 2023 for Social Security Disability beneficiaries and a 10% COLA increase for FERS Disability beneficiaries beginning in January 2023. This is just a projection, it’s not legal or financial advice. The assumptions are rather conservative for the rest of the summer and beginning of fall, but don’t account for Bureau of Labor Statistics hijinks such as not accounting properly for rent increases, which we discuss below. 

The CPI was released Friday, June 10, 2022 by the Bureau of Labor Statistics:, which is 7.3 percent more than the 3rd Quarter 2021’s reading, meaning that if prices stayed the same until September 30, 2022 Social Security Disability beneficiaries would get a 7.3 percent increase in benefits beginning in January 2023. FERS Disability beneficiaries would get a 5.0 increase and Maryland State Disability retirement beneficiaries would get an increase based on complex factors based on contracts signed previously.

What would your benefits look like if the COLAnow estimate of 12.92% is right vs. if the CPI-W stayed exactly the same? 

Type of Benefit 

2022 amount you are receiving

2023 based on May 2022 CPI-W

2023 based on COLAnow est.

Social Security Disability or Retirement




































How we got to COLAnow estimate of 12.92%:

Gas prices, which account for about 6% of the CPI-W, will not drop anytime soon barring a severe recession. Refineries are running at almost full capacity and are just keeping up with American demand.

According to an EIA release, oil refineries west of the Rockies were operating at between 92 and 98 percent capacity during the week ending June 10, 2022:

That level of production is almost unsustainable by most accounts and we haven’t even reached the summer driving season yet. Estimated gasoline demand last week was 9.0 million barrels, which represents lessened demand from last year but only by 1.1%.  “Implied Demand”, as this estimate is called, bears watching as the refineries seem to have very little capacity left. Price spikes above $6 per gallon nationwide would likely follow demand higher than 9.5 million.

Shelter, which accounts for approximately 30% of the CPI-W, should rise by at least 0.6% per month because rent increases from last year are baked in to the BLS method of surveying shelter prices. Rent was approximately flat in May 2022, according to BLS, which is ludicrous and needs to be explained. All other sources of rent inflation, such as, has rent increasing 20% year-to-year. 

Food prices, which are approximately 14% of the CPI-W, are rising with no end in sight. According to non-BLS sources, such as, grocery store prices have broadly risen by 15% or more in the last nine months. 

Goods prices, which account for approximately 21% of the CPI-W, are starting to heat up. This includes new cars, used cars, clothing, and medical items, among others. The cost to produce these goods is rising so the prices are rising.

What Causes Inflation? 

The simple answer is that there is either more money seeking a product or service than there was yesterday, or there are less products or services available but the same amount of money available to pay for them. Also, there can be a combination of those two things. 

100 people come to Nancy Sinatra’s yard sale. 30 of them have $3, 30 have $2 and the other 40 only have $1 each. Nancy Sinatra is running a yard sale and only has 60 Frank Sinatra records left, but all 100 people are huge Frank Sinatra fans. What is Nancy going to do? She is probably going to sell the 60 Frank Sinatra records to the 60 people with the most money, meaning that the price for Frank Sinatra records of that kind would be $2. 

Example #1: Supply-Side Inflation: Now what if 30 of those Sinatra records were destroyed by angry Bing Crosby fans? Nancy only has 30 records left, and would then sell all 30 to the people with $3, raising the price for Frank Sinatra records to $3. 

Example #2: Demand-Side Inflation: Now what if there were no records destroyed, but the 30 people with $2 got a loan from Sammy Davis Jr. for $1 each? The 30 people that originally had $2 now have $3. Add them to the original 30 people with $3 and Nancy now has 60 customers with $3 each, and 60 records to sell. So now the price goes up to $3 because there is more money available. 

Example #3: Both Supply-Side and Demand-Side Inflation: This time, Sammy Davis, Jr. loans $1 to everyone, increasing the top 30’s money to $4, the middle 30’s to $3 and the bottom 40 to $2. Also, Bing Crosby fans ravage Nancy’s beautiful record collection and she only has 30 left. 30 people now have $4, and Nancy only has 30 records, so she raises the price to $4.

Example #3 is exactly what is happening to the U.S. economy now. Except we are not dealing with Nancy Sinatra, we are buying from the oil companies, gasoline refiners, landlords, home sellers, grocery stores, etc. They have less to sell us because of the war in Ukraine, among other issues. At the same time there are more people in the world willing to pay them for their products because China has been printing $5 trillion per year since 2009 and releasing some of it into the world economy (yes, I know, U.S. pandemic relief didn’t help, but this problem has been more than a decade in the making).