Galloping inflation obliges, American retirees will benefit in 2023 from the biggest nominal increase in their pay-as-you-go pension since 1982: 8.7% increase or 145 dollars per month, after an increase of 5.9% in 2022, a announced, Thursday, October 13, Social Security (social insurance for retirees, disabled and veterans). The 70 million American retirees will receive an average of 1,814 dollars per month next year against 1,669 this year.
Contrary to popular opinion, there is a pay-as-you-go pension in the United States, created in 1935 under the New Deal by Franklin Delano Roosevelt and managed by Social Security. Financed by a tax of 12.4% on wages, it represents approximately half of pensioners’ income and has been indexed to the cost of living since 1975. The other part of their income comes in particular from funded pensions, but these suffered a sharp fall with the decline of Wall Street. “It helps older people have a little more leeway to deal with inflation”, rejoiced President Joe Biden. Employees are less well off, who certainly had a nominal increase in their weekly wages of 4.1% over one year, but a real drop of 3.8%. This situation is hardly going to get any better in view of the poor inflation figure published the same day.
The rise in prices for the month of September turned out to be worse than expected: the figure certainly fell to 8.2% against a high of 9.1% reached in June. But this ebb is explained by the fall in the price of energy, with a gallon of gasoline going from 5 dollars in mid-June to 3.7 in mid-September (it has since risen to 3.9). On the other hand, inflation excluding energy and food reached a record since 1982 with an increase of 6.6% against 6.3% a month earlier. Housing, which represents a third of the index, continues to grow with a rise of 6.6% over one year.
“Americans are gripped by the cost of living”
A few weeks before the mid-term elections with an uncertain result, the Republican camp fired red balls at Joe Biden: “Biden’s Inflation Nightmare Destroys Your Retirement Savings”, accused Sean Hannity, the star host of Fox News, in his morning email. The President of the United States is struggling to hide his embarrassment. “Americans are gripped by the cost of living: it’s been true for years, and they didn’t need today’s report to tell them. It is essential to work to give air to middle-class families to meet their expenses,” he tweeted, making inflation a global phenomenon and praising the excellent performance of the job market – unemployment is at its lowest in half a century and the country has recreated all the jobs destroyed during the Covid-19 pandemic, a positive phenomenon but which accentuates economic overheating.
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