Additional Coverage:
- Jerome Powell points at a worrying trend impacting American households — despite strong US GDP (marketrealist.com)
Despite Strong GDP, Fed Chair Powell Highlights Rising Affordability Crisis for Many Americans
**WASHINGTON D.C. ** – While recent reports show a stronger-than-expected growth in the U.S.
Gross Domestic Product (GDP), Federal Reserve Chairman Jerome Powell points to a concerning trend impacting millions of American households: the struggle with affordability. Persistent inflation, he notes, is forcing low and middle-income families to drastically alter their shopping habits to make ends meet.
Powell, who recently kept interest rates unchanged after three consecutive 25-point drops in 2025, explained that the current wave of American consumption is largely driven by high-income individuals and households benefiting from increased values in real estate, stocks, and securities. However, a starkly different picture emerges for those on the lower end of the economic spectrum.
“We also know that for some time now, for a year or more, we’ve been hearing from retailers, for example, that serve lower-income customers, whether it be food or the big box stores or any of that – they’re saying the same thing, which is our consumers are looking to economize,” Powell stated in a recent interview. He added, “They’re trading down from brands, and they’re buying less, and it’s changing their buying habits, and that kind of thing.
That’s a reality of what we’re seeing. They’re still consuming, but they’re feeling it in a different way.”
The Fed Chair emphasized that he frequently hears concerns about affordability from both individuals and small businesses grappling to survive in the current economic climate. Powell believes the most effective solution is to bring inflation down to the Fed’s target of 2%. The current inflation rate, however, remains considerably higher.
According to the latest Consumer Price Index (CPI) data, Powell estimates the inflation rate reached 2.9% in December. “I would say more broadly on affordability, we have a vast network through the Reserve Banks and also through the Board of Governors where we talk to small and large businesses and households,” he explained.
“So we do hear a lot about affordability, and we take that very seriously, and we take it to heart, because one of our jobs is price stability. The best thing we can do for people who are feeling that squeeze is to keep inflation under control, and, frankly, to finish the job of getting inflation back down to 2%.”
Powell also didn’t shy away from attributing some of the blame for the elevated inflation to the previous Trump administration’s tariff policies. “These elevated readings largely reflect inflation in the goods sector, which has been boosted by the effects of tariffs. In contrast, disinflation appears to be continuing in the services sector,” he noted.