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Yellen Defends Economic Health of Americans Amid Persistent Inflation

Yellen Defends Economic Health of Americans Amid Persistent Inflation

Apr 30, 2024

Yellen Defends Economic Health of Americans Amid Persistent Inflation

In a recent appearance before the House Ways and Means Committee, Treasury Secretary Janet Yellen defended President Joe Biden’s economic policies, amidst a backdrop of ongoing price inflation.

Secretary Yellen, presenting Biden’s 2025 budget, countered Republican claims that the administration is raising taxes and insisted that Americans are in a better financial position today, despite inflation rates that have soared over the past few years. "So, people generally are better off in spite of the price increases," she stated during her testimony.

The Treasury Secretary cited the decrease in inflation, referencing the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, as evidence of stabilizing conditions. Although the PCE index saw an uptick to 2.7 percent in March, it is comparatively lower than the June 2022 peak of 7.1 percent. The core PCE, which excludes the more volatile food and energy sectors, remained steady at 2.8 percent last month.

Yellen acknowledged that while prices have not reverted to pre-pandemic levels, wages have increased, citing data from the Bureau of Labor Statistics (BLS). The BLS reported a 1.2 percent rise in the Employment Cost Index for the first quarter, surpassing market expectations. However, adjusted for inflation, compensation saw little change, and real average hourly wages have declined by 2.7 percent since January 2021.

In the realm of tax policy, Republicans have accused Biden of planning tax hikes for Americans, including those earning less than $400,000, by letting the Tax Cut and Jobs Act expire in 2025. This act, passed during Trump's administration, lowered the top individual income tax bracket and adjusted thresholds for other brackets. President Biden has indicated through a post on April 25 that he intends to allow these cuts to lapse.

Republicans, such as Rep. Ron Estes (R-Kan.), presented estimates on potential tax increases should Trump’s tax cuts expire. In contrast, Yellen reiterated Biden's position, stating, "He will not support higher taxes on families making under $400,000."

Inflation metrics this year have shown signs of reacceleration, with the Consumer Price Index (CPI) reaching 3.5 percent in March and core PCE rates rising — trends that are causing concern over a potential new surge in price pressures. Contributing factors include higher energy and housing costs, as well as increased money supply.

Economic sentiment is waning, as evidenced by consumer confidence indices, amid these inflation concerns and rising mortgage rates, which have surpassed 7 percent, exacerbating housing affordability issues.

The Epoch Times Article


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