Treasury Secretary Says High Prices Aren’t Leaving

U.S. Treasury Secretary Janet Yellen said Thursday that prices will likely remain high for many Americans, even as inflation slows. Inflation has risen at an alarming rate in the last couple of years, and although it has dropped somewhat, it is still above the government’s overall goal.

Yellen was testifying before the Senate Banking Committee this week, answering a variety of questions as part of “The Financial Stability Oversight Council Annual Report to Congress.” Yellen gave statements and answered questions about inflation, unemployment, financial threats to the U.S., banking and Wall Street crises, and other topics.

Inflation is a particularly pressing issue for many Americans, with extremely high inflation rates during and after the COVID-19 pandemic. June 2022 saw a record-breaking 9.1% inflation rate, and although the rate has dropped since then, it is still above the 2% mark that the government is hoping for. The prices for food, energy, healthcare, vehicles, and many other products remain far higher than normal across the board.

Unfortunately, Yellen didn’t seem enthusiastic about the prospect of prices dropping. “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,” she said during her testimony.

She did point to rising median wages throughout the country as a sign that American families may not be hurt as badly by inflation. But while median-income earners might be faring well, these rising costs are becoming particularly burdensome to low-income families throughout the country. And even worse, people on fixed incomes are seeing their limited funds stretched thin by these rapidly rising costs.

According to reports by the U.S. Senate Joint Economic Committee, typical American households need $11,000 more every year just to maintain the same standard of living as January 2021, before inflation raced to record highs. And even though wages rose as well, they did not typically rise as quickly as inflation over the last two years.

Yellen’s interview tried to assuage fears of rising costs, but many Americans are feeling squeezed in their pocketbooks and are not very comforted by political messaging. While 21% of Americans say their financial situation has improved since Biden took office, a full 50% say their financial situation has gotten worse over the last few years.