Last week unleashed a flood of emails. Both of my readers reported that they, too, had noticed that their Social Security Christmas letter announced their cost of living increase for the coming year while at the same time stating the actual monthly check would be smaller. One Concerned Mother of Three wrote: “WTF!!! How is that possible?”
Now, just calm down, there is a simple explanation and your Uncle Roger is happy to provide it. (Do allow me some minor technical transgressions in order to make it simple.)
First, visit your government’s Bureau of Labor Statistics at this link. There you will find the Consumer Price index for every month over the past many years. Jot down the index value for January 2010 (which was 216.687) and the index value for 15 years later, last December, 2024 (which was 315.233). A quick calculation will tell you that if you put $216.68 in the bank and come back 15 years later to find you have $315.23, your compounded annual return was .0253. Thus, we have averaged 2.53% government reported inflation each year for the past 15 years.
No problem.
BUT, you exclaim with indignation as you realized you have been duped, If health care is one-sixth of the economy and last week we pretty much showed it has increased, on average, 9.5% per year for the past 15 years, what does that mean for the other 5/6th of the economy? Of course that can only mean one thing: As the cost of health care was rising, the cost of everything else was going down. This, I am certain, is exactly what you have experienced.
It’s magic - All economists know that increases in health care cause the price of everything else to go down.
If you take the January, 2010 CPI and multiply it by 1/6 you get 36.11. When you apply an increase of 9.5% per annum to that, 15 years later you have 140.89. When you subtract that number from the December, 2024 CPI of 315.233 you have removed healthcare from the 2025 economy and get today’s price index for the 5/6th of today’s economy that is not health care, which is 174.339.
Now go back to January 2010 and multiply the CPI then (216.687) by 5/6 and you get the non-health care economy then, which was 180.57. Compare that to the number at the end of the last paragraph (174.339) and you see that, according to your very own government’s data, the cost of everything that was NOT health care has gone down from 180.57 in 2010 to 174.339 in 2024, an annual decrease over 15 years of .00233 (for journalism majors that’s a decline of just over two tenths of a percent per year).
Just compare that with your own experience. Surely you have noticed that housing, eggs, gasoline and - of course - all your taxes, have all gone steadily down over the past 15 years.
So, here we have proof of the message of last week: Everything on the internet is true, just as true as everything your government tells you.
Put on your mask!
I know that this is not a partisan issue... but I think about how much the North and South hated each other even as they were too far away to hear each other in person, let alone read their social media posts. Something's gotta give at some point. It feels like none of the paths that we travel in the USA in 2025 are very sustainable. Sigh...