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Senators split on health of U.S. economy

UPI
Treasury Secretary Janet Yellen testifies at the Senate Banking, Housing and Urban Affairs Committee hearing Tuesday in Washington. Photo by Jonah Elkowitz/Medill News Service

WASHINGTON, Feb. 8 (UPI) -- Senators voiced fierce opposition over the state of the U.S. economy Thursday during a Senate Banking, Housing and Urban Affairs Committee hearing to examine the results of the Treasury Department's Financial Stability Oversight Council annual report, released in December.

The report highlighted how low inflation, a low unemployment rate and increased real wages have contributed to a robust economic recovery since the COVID-19 pandemic. However, it also called attention to concerns over the economy in 2024, including high interest rates.

Treasury Secretary Janet Yellen touted the rapid economic recovery in 2023, saying that average American wages are keeping up with rising costs.

"Over the past three years, the Biden administration has driven a historic recovery," Yellen said. "We are doing better than any other advanced country."

However, while Democrats are more optimistic about the economy, Republicans remained skeptical and grilled Yellen about rising costs since the height of the pandemic.

"It seems some of my friends on the other side live in an alternate universe," said ranking member Tim Scott, R-S.C.. "The Biden administration and 'Bidenomics' has decimated, destroyed, leveled, family, after family, after family."

Scott cited current inflation and savings statistics, including the roughly 16% total inflation increase since 2021. According to Scott, two-thirds of Americans do not have $1,000 in their savings account.

"It is not a problem, it is a crisis," he said.

Sen. John Kennedy, R-La., echoed similar concerns, telling Yellen she is a "good sport to go out every day and try to defend 'Bidenomics.'"

Kennedy also said these higher prices are here to stay, leaving many Americans without wage increases at odds.

Yellen argued that real wages have increased to balance out these costs. In fact, according to the U.S. Treasury, "real weekly earnings for the median worker grew 1.7% between 2019 and 2023."

"Wages are also up," Yellen said. "Americans, on average, are better off, in spite of the higher price level."

On the other side of the aisle, Democrats largely praised the state of the economy and the work of the Biden administration.

Sen. Tina Smith, D-Minn., said many economists predicted a recession last year.

"In fact, the economy has been defying expectations," she said. "Since Biden took office, wages have increased significantly for low and middle-income earners."

Smith touted the successes of the Inflation Reduction Act, which she said improved aspects of the economy and infrastructure across the nation.

In terms of investment and overall economic growth, she said the country is much better off, especially compared to other nations.

Likewise, Sen. John Fetterman, D- Pa., was quick to praise 'Bidenomics' and the job of the Treasury. He seemed surprised at the list of economic developments, such as a low unemployment rate and increasing wages.

"That's pretty good," Fetterman said. "Any fair experts would say that our economy is the envy of the world."