Bob’s Journal 5/1

News and Rumors About Social Security

Social Security has been in the news a lot lately. Change definitely is afoot there, but there have been many rumors and allegations that aren’t accurate.

Early this year, the Department of Government Efficiency (DOGE) announced that 10 offices would be closed and some employees would be laid off.

Former Commissioner Martin O’Malley responded by stating that there would be a “total system collapse” and said the Trump administration was “taking a wrecking ball to Social Security.” He also forecast that there would be interruptions in benefit payments.

These were O’Malley’s opinions and forecasts, not facts. It’s worth mentioning that O’Malley is a former governor of Maryland, ran for President in 2015-2016 and ran to be chairman of the Democratic National Committee after the 2024 election. In other words, he’s a partisan politician who still has national aspirations.

Matters also weren’t helped when current Acting Commissioner, Leland Dudek, initially said there would be significant layoffs and office closures. He quickly retracted the comments.

Dudek also stated that a court decision would require him to close the entire agency. The court had to issue a letter stating that interpretation was incorrect.

The Social Security Administration (SSA) issued a notice that there have been no permanent closings of local field offices and none are planned. Some local offices at times close temporarily because of weather or facilities issues but reopen after the issues are resolved.

A hearing office (where beneficiaries appeal SSA decisions) in White Plains, New York, was closed. SSA also closed several small hearing rooms which had no employees assigned to them and weren’t used.

There have been staff reductions. In addition, more people are contacting SSA because of all the rumors and reports. SSA says call volume is up about 19%. That’s led to significant waiting times on the main SSA telephone number and difficulty obtaining appointments at local offices.

When possible, take any action regarding Social Security online. There are some actions that can’t be taken online, such as applying for survivor’s benefits or changing personal information. For these actions, it is best to contact the local office directly instead of going through the main SSA number.

DOGE required SSA to change in how a person’s identity is verified in certain situations, such as when a person applies for benefits or changes direct-deposit information.

In those cases, a photo ID now is required, but a visit to an SSA office isn’t. An alternative is to upload a photo of the ID through login.gov or a “my Social Security” account on the Social Security website.

An unfortunate consequence of these actions is that many people are applying for Social Security benefits earlier than previously planned, according to The Wall Street Journal.

I continue to recommend not to accelerate benefit claims because of estimates of the demise of the Social Security trust fund or the stories that have come out this year.

I think it’s unlikely benefits will be reduced for anyone at or near retirement age. But even if benefits are reduced, it’s better to have them cut from the higher level than at the lower level paid to those who claim early.

In other Social Security news, SSN announced that this summer, people with online Social Security accounts will have digital access to their Social Security numbers.

This effectively is a digital Social Security card that can be used when people need to look up or prove their Social Security numbers. Those who have lost their cards won’t have to apply for and wait to receive a physical card.

The digital access to a Social Security card also means people won’t have to carry physical cards and risk theft of the cards and their numbers.

The Arithmetic of Lower Stock Returns

U.S. stock returns since the financial crisis have exceeded the long-term average and returns of most other stock markets by considerable amounts.

Investors should ask how likely it is that the exceptional performance will continue.

Stock returns are based partly on economic growth. The revenues and earnings of businesses grow with the economy. Over the very long term, there’s a relationship between gross domestic product (GDP) growth and stock returns.

But other factors influence stock returns over any shorter period. Those factors pushed stock returns higher in recent years and could restrain returns in the coming years.

U.S. stock indexes sold at relatively low valuations during the financial crisis. Since then, valuations increased substantially. The S&P 500 Index currently has a price-earnings ratio of around 25. The long-term average for the United States and the current average for other developed markets is around 16.

About a third or more of U.S. stock returns since the financial crisis are attributable to investors paying more for each dollar of earnings, which is what reflects an increase in valuations.

Remember that interest rates were kept artificially low until 2022. Most of the time since 2022, investors have been expecting rates to decline back to the lows. When interest rates rise, investors usually are willing to pay less for stocks because returns from lower-risk investments increase.

Another factor in the exceptional returns in U.S. stocks is that profit margins of U.S. companies, especially those in the S&P 500, increased from a long-term average of around 7.8% to almost 11%. Some analysts attribute about one-third of recent U.S. stock returns to rising profit margins.

In addition, a few companies account for most of those rising profit margins. Earnings per share at the 493 stocks in the S&P 500 that aren’t the Magnificent Seven declined 4% in 2023 and increased shy of 5% in 2024.

To expect the recent outperformance of U.S. stocks to continue, investors must expect the current high profit margins to continue or improve.

It’s aggressive to be optimistic about profit margins when interest rates are higher and global economic relationships are in upheaval.

Higher valuations and profit margins were the primary drivers of excess U.S. stocks returns in recent years. Investors need to decide how much they want to bet that those trends will continue.

Changes for Medicare Part D Prescription Drug Plans Announced

Insurers have been told key 2026 details about Part D prescription drug plans by the Centers for Medicare and Medicaid Services (CMS). Medicare beneficiaries can factor these into their planning.

The annual out-of-pocket maximum for Part D beneficiaries will be $2,100 in 2026. That’s an increase from $2,000 in 2025.

The annual deductible for Part D plans will rise to $615 in 2026. A beneficiary pays all covered prescription costs until the deductible is met. But insurers can set the deductible at lower levels in their policies.

The insurers will use this information and other details provided by CMS to develop their policy offerings for 2026. We’ll learn what the policy details look like during Open Enrollment from Oct. 15 through Dec. 7. But during the summer, CMS usually issues summary details of policies that have been submitted to it for review. I’ll be looking for those summaries.

The Data

The Consumer Sentiment Index from the University of Michigan was 52.2 at the end of April. That’s down from 57 at the end of March but up from 50.8 in mid-April.

The index declined for four consecutive months, and April’s month-end level was the lowest since July 2022.

Inflation expectations among consumers for the next 12 months increased to 6.5%, the highest level since 1981.

The Consumer Confidence Index from The Conference Board fell for the fifth consecutive month in April to 86.0, 7.9 points below its March level.

Both the Present Situation Index and Expectations Index components declined, but the sharpest decline was in the Expectations Index. That index fell to 54.4, the lowest level since October 2011.

The Conference Board said an Expectations Index below 80 typically precedes a recession.

The decline in confidence occurred in all age groups and political affiliations. But it was strongest in consumers between ages 35 and 55 and households with earnings of more than $125,000.

Personal income increased 0.5% in March after rising 0.7% in February.

Personal consumption expenditures (PCE) rose 0.7% in March following a 0.5% increase in February.

The PCE Price Index was unchanged in March. It had increased 0.4% in February. The 12-month increase in the PCE Price Index was 2.3% through March and 2.7% through February.

The core PCE Price Index also was unchanged in March after rising 0.5% in February. The core PCE Price Index rose 2.6% over the 12 months ending in March and 3.0% for the 12 months ending in February.

GDP declined at an annualized rate of 0.3% in the first quarter, according to the first estimate. That’s the first decline since the first quarter of 2022 and the second decline since the second quarter of 2020. GDP had increased 2.4% in the fourth quarter.

The Employment Cost Index increased 0.9% in the first quarter of 2025, the same amount as in the fourth quarter of 2024. Wages and salaries increased 0.8% in the first quarter (down from 1.0% in the fourth quarter) but benefits increased 1.2% in the first quarter (0.8% in the fourth quarter).

Home prices increased 0.7% in February, according to the S&P Corelogic Case-Shiller Home Price Index. The index had increased 0.1% in January.

The 12-month increase in the index was 4.5% through February and 4.7% through January.

The House Price Index from FHFA rose 0.1% in February and 0.3% in January. Over 12 months, the index was up 3.9% through February and 5.0% through January.

Existing home sales declined 5.9% in March, which followed a 4.4% increase in February. The decline in March was the biggest percentage monthly decline in existing home sales since November 2022.

But pending home sales jumped 6.1% in March and 2.1% in February.

Pending home sales fell 0.6% over the 12 months through March and 3.6% over the 12 months through February.

The Dallas Fed Manufacturing Index plummeted to negative 35.8 in April, its lowest level since May 2020, from negative 16.3 in March.

The index has been above 0, indicating growth in the sector, only twice since April 2022. Those two times were December 2024 and January 2025, shortly after the presidential election.

The Kansas City Fed Manufacturing Index fell to negative 5 in April from positive 1 in March. The index has had positive readings in only two of the last 12 months.

Durable goods orders rose by 9.2% in March after increasing 0.9% in February. But most of that increase was in aircraft orders.

Durable goods orders excluding aircraft and defense orders, which is considered a good proxy of general business investment, increased 0.1% in March and declined 0.3% in February.

The private sector created 62,000 jobs in April, according to the ADP Employment Report, down from 147,000 jobs in March.

The number of job openings declined by 288,000 to 7.192 million in March, according to the JOLTS (Job Openings and Labor Turnover Survey) report. Hires, total separations and quits changed only modestly from February to March. Layoffs decreased a little.

New unemployment claims increased by 6,000 to 222,000 in the latest week.

Continuing claims, which lag a week behind new claims, decreased to 1.841 million from 1.878 million.

The Markets

The S&P 500 rose 5.13% for the week ended with Tuesday’s close. The Dow Jones Industrial Average gained 3.40%. The Russell 2000 increased 4.60%. The All-Country World Index (excluding U.S. stocks) added 2.65%. Emerging market equities advanced 2.61%.

Long-term treasuries rose 4.30% for the week. Investment-grade bonds increased 2.48%. Treasury Inflation-Protected Securities (TIPS) added 1.40%. High-yield bonds gained 1.82%.

On the currency front, the U.S. dollar advanced 0.44%.

Energy-based commodities fell 1.76%. Broader-based commodities lost 0.30%. Gold declined 1.60%.

Bob’s News & Updates

A recent review on amazon.com of my latest book said, “Carlson is a unique national Asset while alive! Get the book, dude!” Look for “Retirement Watch: The Essential Guide to Retiring in the 2020s” (Regnery Capital: 2023) at amazon.com, barnesandnoble.com, booksamillion.com, and regnery.com.

My previous book, “Where’s My Money: Secrets to Getting the Most out of Your Social Security,” is receiving mostly five-star reviews on Amazon for telling you clearly what your benefit options are in different situations and how to determine the best choice for you. You can find it on amazon.com or Regnery.com.

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I’m a senior contributor to the Forbes.com blog. You can view my contributor page here.