The US Mint, in its 2024 Annual Report report, includes a table showing the cost of producing pennies and nickels. As the bottom row shows, total cost of making a penny is now 3.69 cents; total cost of making a nickel is 13.78 cents. It is apparently the 19th consecutive year that the cost of making pennies and nickels is above their face value.

There’s been a long-standing concern that if pennies and nickels were eliminated, then prices would jump up to the nearest multiple of 10 cents. But as inflation has gradually raise price levels, the effect of such a change–if it was ever all that likely or large to begin with–doesn’t seem major. Also, with cash in rapid decline as a share of all transactions and credit cards rising, it’s not clear why vendors would need to raise prices at all (except perhaps for those paying cash?)

It’s perhaps odd here is that during the pandemic in 2021, there was “coin shortage.” What seemed to be happening was that while people were continuing to receive coins as change for cash purchases, they were not recirculating those coins for future purposes. A lot of people (like me) seem to have a coin jar accumulating loose change on a shelf somewhere. Even during the coin shortage, the number of coins officially in circulation, including my coin jar, remained fairly high. But in 2024, the number of coins in circulation has plummeted. My guess is that a change in spending papers, with buyers using credit and debit cards for a larger share of all purchases, means that economic transactions can now happen just fine with a smaller number of coins.

It seems as if whether the US government makes an official decision to phase out pennies and nickels, or not, the actual use of those coins is in decline.

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