Jerome Powell Says, 'This is a Good Economy' As 44 Million Americans Face Hunger With Food Prices Stubbornly Not Coming Down

Federal Reserve Chairman Jerome Powell is overall optimistic about the state of the economy, recently saying, "This is a good situation. Let’s be honest, this is a good economy."

His comments are supported in part by unemployment remaining below 4% with inflation's general trend continuing downward, even if it's not at the Fed's 2% target yet.

While Americans’ feelings about the economy have been improving over the past couple of months, their optimism is still below normalized longer-term levels.

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According to the University of Michigan's consumer sentiment index, sentiment is still 6% below its long-term average following inflation's worst spike in four decades.

One possible explanation for continued skepticism of the economy is the rising cost of food, which continues getting more expensive. Economists say it's unlikely food prices will revert to pre-COVID levels instead of just decelerating.

Jeffrey Dorfman, a professor of agriculture and resource economics at NC State University, said that "people have only stayed ahead by working more jobs" and that "for most things, prices will never go back down. Exceptions include fertilizer, energy and commodity prices." Noticeably missing from these exceptions is food.

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In part, this is because prices usually only go down when something is wrong with the economy. The last time America experienced significant deflation was in the early 1930s, during The Great Depression.

While the U.S. stock market is pushing for new all-time highs, many Americans are not feeling those benefits. According to Feeding America, 44 million Americans face hunger, including 1 in 5 children.

One CEO's proposed solution to high food costs caused significant controversy.

Gary Pilnick, the CEO of WK Kellogg Co. KLG, raised ire when he said that people struggling financially could eat cereal for dinner. 

"Cereal for dinner is something that is probably more on trend now, and we would expect [it] to continue as that consumer is under pressure," Pilnick said.

The economic situation also has caused increased demand at America's food banks.

According to The Nourishing Hope Pantry, a Chicago nonprofit providing food to those in need, there's been a 20% increase in demand over the past year, forcing them to occasionally turn away some in need.

The situation could get worse in the near term — once the school year ends, students won't continue to receive free school meals.

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