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On paper, the U.S. economy has seemed strong for most of 2026. Anecdotally, people will say otherwise.
A lot of people who lost jobs earlier in 2026 are still out of work many months later. And while inflation cooled slightly in November, higher costs are still plaguing consumers. They’re also hurting companies, which may explain why hiring seems to have come to a standstill.
December’s jobs reports further solidifies the fact that the U.S. economy may be teetering on the edge of a downturn. And that could have an impact on Social Security recipients down the line.
December’s job report disappoints
In December, the Bureau of Labor Statistics reported that the U.S. unemployment rate rose to 4.6% in November — the highest level in years. It also found that job growth was sluggish.
Why the weak numbers? It’s likely a combination of stubborn inflation, tariff-related pressures, and general uncertainty.
In November, consumer confidence fell to its lowest level since April, per a Conference Board survey. It’s clear that consumers are feeling hesitant to spend their money.
If consumer spending declines in the coming year, Corporate America will feel the pain. That helps explain why fewer companies are hiring — and why the jobless rate has suddenly ticked upward.
What weak job numbers mean for Social Security
Seniors on Social Security rely on the program’s annual cost-of-living adjustments (COLAs) to maintain their buying power from year to year. December’s jobs report won’t have any impact on the upcoming 2.8% COLA Social Security recipients are getting. That COLA is set in stone.
Higher unemployment numbers, however, could indirectly lead to a smaller Social Security COLA in 2027.
Social Security COLAs are tied directly to inflation — specifically, changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers. But if unemployment remains high in 2026 and hiring slows down even more, that could lead to a decline in consumer spending.
That decline could, in turn, lead to lower inflation. And if there’s a big dip in inflation, seniors on Social Security may find themselves with an almost negligible COLA on their hands in 2027.
Of course, the news isn’t all bad. If inflation declines in 2026, that might allow the upcoming 2.8% COLA to go further for seniors.
It’s also worth noting that a dip in inflation can be beneficial for Social Security recipients, even if it signals a smaller raise. What seniors lose in the form of smaller checks, they gain in the form of slower price gains.
All told, it’s too soon to sound alarms about where the U.S. economy is headed in 2026. Hiring naturally tends to slow down during the tail end of the year, and it may take a few cycles to see an uptick in job growth.
But December’s weak jobs report should serve as a warning that 2026’s Social Security COLA may end up being substantially higher than 2027’s. Seniors should take advantage of that boost to their monthly checks while they can in case the following year’s COLA ends up being a huge letdown.