Fed's Goolsbee Weighs In on Jobs Report, Stagflationary Concerns

Yeah. It's a tough miss on the jobs report today. You never wanna over index on one month's report, and I've been consistently saying, let's not index on total payroll employment anyway because a lot of stuff is going on with immigration with population growth. That said, you saw the unemployment rate inching up, and it's one month is not a trend, but it's not a good month. If you got several months like that, that'd be a concerning spot for the labor market.

Well, as you know, and I appreciate you asked it that way, I'm not allowed to speak for the committee or for anybody else, just myself. I've been saying for some months that we've had relative steadiness in the job market, in my view. The strongest thing in the economy is not AI data center investment, has been consumer spending being solid in a kind of a broad based way in the economy, but the inflation hasn't been ideal. It's at least stalled out at kinda 3% and in some of the latest measures, the inflation disturbingly high in non tariff categories like services. I think we're still basically in that same spot. I remain hopeful slash expecting that conditions will improve, that we'll start to see some progress on inflation, head us back to 2%, and by the end of this year, that we would be in a situation that we could commence our march back down to something like the settling point, which is below where we are today. But each time we add an uncertainty, I think the job market characterized by low hiring simultaneously with low layoffs is a weird combination. And when I talk to business people out in the Midwest, they characterize it's because of the uncertainty. So as we get more uncertainties, I kind of think the time at which it makes sense to act keeps getting pushed back. I always say the first rule of the data dogs is to recognize there's a time for sniffing and there's a time for walking. And when there's uncertainty and you're getting conflicting data points, that's the time for sniffing.

Yes. I mean, as with any supply side shock, it can lead you in a stagflationary direction, which is to say the inflation side of the mandate getting worse. At the same time, the employment side of the mandate is getting worse. And that's always the worst case scenario for the central bank because there's not an obvious monetary policy answer to a stagflationary shock. Oil prices going up, we need to think about is this a transitory thing that's gonna be temporary? Is this gonna be long lived? How big will it be? How long will it last? And how is it affecting the supply chain before we can really say anything about it.