Key Points
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Social Security’s long-awaited cost-of-living adjustment (COLA) will be announced on Wednesday, Oct. 14, at 08:30 a.m. ET.
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Trumpflation (inflation directly driven by President Donald Trump’s policies) will impact Social Security raises for a second consecutive year.
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Meanwhile, Wall Street’s hottest trend is also lifting consumer prices and, therefore, Social Security benefits.
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One of the most anticipated days of the year for Social Security’s more than 71 million traditional beneficiaries is nearly here. On Wednesday, Oct. 14, at 08:30 a.m. ET, the U.S. Bureau of Labor Statistics will publish the September inflation report and provide the final puzzle piece needed to calculate Social Security’s 2027 cost-of-living adjustment (COLA).
Social Security’s COLA is the near-annual raise passed on to beneficiaries to combat inflation (rising prices). If benefits didn’t adjust for rising prices, Social Security income would lose buying power over time.
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Social Security’s 2027 raise should be among the largest in 35 years, according to independent estimates. After the release of the August inflation report, The Senior Citizens League, a nonpartisan senior advocacy group, and Mary Johnson, a Social Security and Medicare policy analyst, both adjusted their 2027 COLA projections to 3.5%. This would match the sixth-largest raise since 1993.
This marks the second consecutive year in which President Donald Trump’s policies have raised consumer prices. Image source: Official White House Photo by Joyce N. Boghosian, courtesy of the National Archives.
Outsize increases to Social Security checks reflect the significant external forces currently lifting consumer prices (i.e., raising inflation). Two catalysts, one of which has never been observed before, are responsible for next year’s supercharged COLA.
Trumpflation
For a second consecutive year, Trumpflation (inflation driven specifically by President Donald Trump’s policies) is increasing consumer prices and directly boosting Social Security’s COLA.
Last year, it was the president’s tariff and trade policy that did the heavy lifting. Trump’s “Liberation Day” tariffs included a sweeping global duty and higher reciprocal tariffs on dozens of countries. Even though the U.S. Supreme Court invalidated these tariffs in February 2026, the tariffs had already increased consumer prices and led to a modestly higher 2026 COLA.
In July 2026, the Trump administration introduced a new round of sweeping global tariffs under a different justification. Applying duties to select goods risks increasing domestic manufacturing costs, which are then passed on to consumers.
This time, it’s the Trump-led Iran war that’s primarily boosting inflation. Iran’s closure of the Strait of Hormuz has led to the largest energy supply disruption in modern history. Soaring fuel prices pushed the annualized inflation rate to a three-year high of 4.2% in May.
Image source: Getty Images.
The AI infrastructure build-out
Whereas Trumpflation is something we’ve seen before, Social Security’s 2027 COLA is also being directly influenced by the artificial intelligence (AI) infrastructure build-out for the first time.
In June, the Federal Reserve began referring to the impact of the AI data center build-out as inflationary. While the insatiable demand for graphics processing units (GPUs), rack servers, high-bandwidth memory, and storage solutions has been a boon for investors in AI hardware stocks, the otherworldly pricing power that these businesses are enjoying is having the opposite effect for consumers.
The law of supply and demand says that when demand outstrips supply, prices rise. But it’s not just demand that’s driving up prices for AI hardware. Persistent supply shortages of GPUs and memory have also afforded AI companies exceptional pricing power.
These higher prices have worked their way downstream, adversely affecting consumers and businesses purchasing laptops, smartphones, and a host of other electronic devices. With no immediate resolution to persistent AI hardware supply shortages, the AI infrastructure build-out is likely to remain inflationary (i.e., push Social Security benefits higher) for the foreseeable future.
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