Social Security's 2027 cost-of-living adjustment (COLA) is projected to reach approximately 3.5%, driven by President Trump's tariff policies and the Iran war's inflationary effects on energy and broader consumer prices. This marks a historic moment, as a COLA of this magnitude hasn't occurred in 30 years, following a modest 2.8% increase in 2026 also boosted by Trump's policies.
The August consumer price index report, due Friday at 8:30 a.m., will be the final inflation data the Federal Reserve receives before deciding on interest rates at next Wednesday's meeting. Economists expect the report to show overall inflation at 3.4% annually and core inflation at 2.4%, with the data potentially determining whether the Fed holds rates or implements a rate hike. The stakes are exceptionally high as market expectations have grown volatile and depend heavily on incoming economic data and energy prices.