"In April, the U.S. economy added 115,000 nonfarm jobs. At first, that might seem like a win, especially since it's well beyond the 55,000 new jobs analysts expected. But the report had a couple of concerning trends. First, a lot of jobs were added within the healthcare sector, but economists don't necessarily view that sector as a good representation of broad growth. Also, hourly wages barely crept up in April, rising just 0.2% on a monthly basis."
"Over the past 12 months, average hourly earnings increased by 3.6%. So while job gains may have been decent, wages fell short. Consumer sentiment is down Another major factor affecting COLA forecasts is declining consumer confidence. The University of Michigan's closely watched consumer sentiment index recently showed Americans growing more pessimistic about the economy and their financial outlook."
"When consumers grow nervous about the economy, they tend to spend less, particularly in discretionary categories. A cooldown in spending could lead to less demand overall. When demand slows, prices can come down. And when prices come down, it generally leads to lower levels of inflation and smaller Social Security COLAs."
Seniors are seeking an estimate for next year’s Social Security cost-of-living adjustment (COLA). Inflation has risen since the Iran conflict began, increasing financial pressure on people relying on Social Security. The 2026 COLA was 2.8%, and expectations for 2027 depend on third-quarter inflation changes. Recent signals point to a potentially smaller COLA. The April jobs report showed 115,000 nonfarm jobs added, but job gains were concentrated in healthcare and hourly wages rose only 0.2% in April, with 3.6% growth over 12 months. Consumer sentiment has also declined, which can reduce discretionary spending, slow demand, and lower prices, contributing to reduced inflation and smaller COLAs.
Read at 24/7 Wall St.
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