Inflation is coming down, but not fast enough for Americans hoping for a widespread drop in prices, according to Treasury Secretary Janet Yellen.
While testifying before the Senate Banking Committee on Thursday, Yellen admitted that prices for most items are unlikely to return to where they were before the inflation crisis began in 2021.
SEN. KENNEDY: "These high prices caused by Bidenomics here to stay, aren't they?"
SEC. YELLEN: "The high prices were not caused by Bidenomics. We suffered a pandemic…"
KENNEDY: "They're here to stay, aren't they?"
YELLEN: "I don't expect the level of prices to go down." pic.twitter.com/7zP0Wa3V7p
— Breaking911 (@Breaking911) February 8, 2024
“I don’t expect the level of prices to go down. Some prices will be higher than they were before the pandemic and will stay higher. But wages have risen considerably, and the pace of price increases has receded over the past six months,” Yellen said during her exchange with Sen. John Kennedy (R-LA).
In 2021 and 2022, prices for everything, including groceries, new cars, and health insurance, surged due to pandemic-induced disruptions in the global supply chain, an extremely tight labor market, and increased consumer demand.
“We don’t have to get the prices down because wages are increasing. So Americans, on average, are better off even though the level of prices is higher,” Yellen said.
However, if you ask the majority of middle-class Americans, they’ll say they haven’t seen an increase in wages, with many needing to have more than one job to pay groceries and rent.
Federal Reserve Chair Jerome Powell echoed a similar sentiment in an interview with 60 Minutes that aired on Sunday.
“The prices of some things will decline, and others will go up. But we don’t expect a decline in the overall price level. That doesn’t tend to happen in economies, except in very negative circumstances,” Powell said.
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Food prices are up 34% from the start of 2021, while shelter costs are up 19%. Additionally, energy prices are up 33%.
The financial burden is particularly felt by middle and low-income Americans, whose already-stretched paychecks are heavily affected by price fluctuations.
“The plight of the economy over the next 12 months may help to dictate whether it was wise or not for President Biden to brag about Bidenomics,” said Mark Hamrick, senior economic analyst at Bankrate.
