Inflation probably picked up a little in September due to the increase in gasoline prices following Hurricane Harvey, so COLA will probably be close to 2%.A little bad weather and a whole bunch of folks get permanent wage increases. Calculated Risk goes into some detail on COLAs, including a bunch of protections against negative adjustments.
What about taxes?
We are at the end of the cycle, the Swamp needs to pay the bills and the market has likely peaked. (How many times have we said that?). But capital gains taxes slow down as well as a bunch of merchant income. Taxes, right now, are rising by 1%, spending needs to rise by 2-3% to support legal obligations, as we see above in the 2& COLA. We should sequester the budget soon, maybe right after the downturn.
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