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One Inflation Number This Morning Sets the Fed’s Next Move and Your Raise.
At 8:30 this morning the Bureau of Labor Statistics releases September inflation, expected near 3.6% year over year, up from 3.4% in August, with gasoline doing most of the lifting. Wall Street will read it for one thing: whether it keeps the Federal Reserve from one more rate hike on October 28. The same report sets something more concrete for 70 million Americans, the 2027 Social Security cost-of-living raise, on track to be the biggest in four years. One number, two verdicts, and they do not agree.
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Your retirement account still shows $500,000.
But that $500,000 buys what $375,000 bought in 2020.
Nobody warned you. Nobody asked your permission. The government printed trillions, ran up $39 trillion in debt, and your dollars quietly lost a quarter of their value.
Now the conditions for another 25% drop are worse.
A new Fed Chair taking over May 15th who wants to cut rates below inflation. That’s not an accident. It’s a strategy called financial repression. It makes the government’s debt cheaper by making your savings worth less.
40 countries are abandoning the dollar. Central banks are dumping Treasuries and buying gold at the fastest pace in 60 years. The petrodollar system that held everything together for 50 years is cracking.
If the dollar drops another 25%, your $500,000 buys what $280,000 used to.
How long can you retire on that?
Same house. Same groceries. Same prescriptions. Same life. But every single month it costs more and your money covers less.
There’s a reason central banks aren’t holding dollars anymore. There’s a reason there’s legislation in Congress to revalue gold. There’s a reason the Treasury Secretary is talking about “monetizing the assets.”
They see the next 25% coming. The question is whether you do too.
A free report called “The Great Gold Reset” explains what’s driving the dollar down, why the next drop could be faster than the last one, and how to protect your purchasing power in 15 minutes. No taxes. No penalties.
© American Alternative Assets. All rights reserved. This is an advertisement.
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What’s on the Table
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• The Print: September CPI lands at 8:30 a.m. ET. Consensus puts headline inflation near 3.6% year over year, up from 3.4% in August, with core inflation (the part that strips out food and gas) near 2.4%. Forecasters see the headline up about 0.5% on the month and core 0.2%.
• The Driver: gasoline. The Energy Information Administration put September’s average regular at $4.36 a gallon, 7.3% above August, enough on its own to add roughly a quarter-point to the monthly headline. Energy is why the top line jumps while core barely moves.
• The Fed Read: the October 27–28 meeting decides whether rates go one notch higher. Markets put the odds of an October hike near one in four, and a core of 0.2% or less likely keeps the Fed on hold while 0.3% revives the hike. The 10-year Treasury (the rate behind mortgages) sits near 5.2%, its highest since 2002.
• The COLA Read: the inflation gauge that sets the COLA (called CPI-W), taken from this same report and averaged across July through September, locks the 2027 Social Security raise. Estimates run 3.4% to 3.6%, the largest in four years and up from 2.8% this year.
• The Wallet: a 3.5% raise adds roughly $70 a month to a typical retired-worker check, and it resets the baseline for the tax brackets, Medicare surcharges and contribution limits that ride the same index.
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Details
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The Same Number, Two Ledgers
At 8:30 a single data point lands, and two very different audiences reach for it. Traders feed it into the odds on the October 28 rate decision. The Social Security Administration feeds the same month’s prices into a formula that sets next year’s raise for about 70 million retirees, veterans and disabled Americans.
Both are reading one number. They are not asking it the same question.
What Wall Street wants it to say. A market sitting near records and betting the Fed is done raising rates wants a cool core, enough to take one more hike off the table. It will look past the 3.6% headline, which gasoline inflated, and fix on the core month-over-month. At 0.2% the Fed can keep sitting. At 0.3% the October hike everyone had written off comes back to life, with the 10-year already at a level last seen in 2002.
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Seven Stocks. One Exit.
Open your last 401(k) statement. Roughly one dollar in every three is riding on the same handful of AI companies.
Yours. Your neighbor’s. Every index fund, pension, and retirement account in America — crowded into the same trade. That’s the part of the AI bubble nobody talks about. Not how big it is. How crowded it is.
A packed theater. One exit.
When the crowd changes its mind — and crowds always change their mind — everyone heads for that exit in the same moment. Sellers everywhere. Buyers nowhere.
You can’t predict the fire. But you can pick your seat.
© American Alternative Assets. All rights reserved. This is an advertisement.
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What the COLA formula will say. The same report’s cost-of-living gauge does not forecast anything. It averages what prices actually did over the summer and turns it into a check. That math is about to certify a raise near 3.5%, the biggest in four years, which is the federal government stating in writing that the cost of living rose about three and a half percent, not the two percent the Fed still calls its target.
Why the two disagree. Markets trade inflation as a question about the future: will it cool enough to let rates come down? The COLA treats it as a fact about the past: what did a basket of goods cost this summer? A benefit raise near 3.5% and a market betting inflation is beaten cannot both be right about where prices are. One of them is a wager. The other is a measurement.
What that leaves you. For a reader near retirement, the COLA is the line that matters more than any forecast on the Fed’s rate chart, and this year it lands with a sting: a raise that large is confirmation inflation never came home to 2%, and it quietly lifts the brackets, premiums and limits measured against the same index. For the investor, the tell is that the government’s own cost-of-living arithmetic disagrees with the market’s bet that the Fed is done. When those two diverge, the cash register has the better record. It is the rare inflation reading that turns straight into money owed, the same month it is measured.
At 8:30 one number prints, and two worlds read it. Wall Street asks whether it frees the Fed to stop hiking, and its answer can flip by the afternoon. Seventy million Americans learn how much bigger their checks get, and that answer is locked for a year. It is about to say, in the government’s own hand, that the cost of living rose about three and a half percent while the target stayed two.
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Harold Winston
Advised individual investors for thirty years. Now reads markets for a living.
Stay grounded while markets move fast.
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