President, Federal Reserve Bank of Chicago
Watch CNBC's full interview with Chicago Fed President Austan Goolsbee
Chicago Fed President Austan Goolsbee joins 'Money Movers' to discuss recent jobs data, inflation levels, how the Fed should address current economic conditions, and more.
About Austan Goolsbee
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, has recently expressed increased concern about inflation, stating that progress on disinflation has stalled and that the inflation rate is now rising. In multiple interviews in May and June 2026, Goolsbee noted that inflation has been above the Fed's 2% target for five years, and that after a period of progress, the improvement stopped last year and has recently deteriorated. He pointed to "warning signs" in services inflation, which he described as "high and rising" and not attributable to temporary factors like tariffs or oil prices. Goolsbee said he dissented from a rate cut at the last meeting of the previous year, feeling it was too early, and that he does not regret that position. He stated that the job market has been "stable without being good" and that, given the inflation picture, it "behooves us to take a serious look at what's happening on the inflation side." On artificial intelligence, Goolsbee said in late May 2026 that while AI is "coming in fast" and will be "massively transformational," he does not expect rapid job losses, citing industries where the "oops factor" makes AI unreliable. He advised that health care is likely to remain a secure industry due to an aging population. Regarding the Federal Reserve's communications, Goolsbee expressed skepticism about the use of forward guidance and "committing three years ahead forecasts," and welcomed a communications task force organized by the chair. He also commented on incoming Fed Chair Kevin Warsh, saying he expects Warsh to bring "a lot of new ideas on monetary policy" and that it is "good" to have new ideas, while declining to specify a preferred direction for reducing the Fed's balance sheet.
Transcript (21 segments)
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Carl Quintanilla0:00
Been left behind. Yeah, all-time high for both earlier this morning. Thanks, Mike. For more on the jobs number and the economy overall, let's get to Steve Liesman with a very special guest today. Hey, Steve.
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Steve Liesman0:09
Hey, Carl. Thanks very much. We're joined from California by Chicago Fed President Austan Goolsbee. Austan, thanks for joining us this morning. Just so much.
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Austan Goolsbee0:17
Good to see you, Steve.
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Steve Liesman0:19
Hey, let's start off with the jobs report. It came in quite above expectations. Unemployment rate remaining stable at 4.3%. What's your overall take on the job market?
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Austan Goolsbee0:29
Yeah, pretty much stable for a year and a half. I characterize that we've been stable without being good. If you look at the rates, the unemployment rate has been stable, the hiring rate's been stable, the layoff rate's been stable, the vacancy rate has been stable. So I still think there's not a lot of evidence that the job market is falling apart. And on the other side of the Fed's mandate, inflation hasn't been great. And it's been going the wrong way lately.
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Steve Liesman0:59
I want to get to inflation more specifically. But what's not good about the job market? You've been above 100,000 for a couple of months in a row. You're at a relatively low unemployment rate. And people think that.
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Austan Goolsbee1:10
The part that's not good is the hiring rate. I mean, the hiring rate is—we're in a low, high or low fire environment, as they say. The hiring rate is low enough it would correspond to kind of the depths of a recession. But at the same time, the layoff rate is as low as would be at the peak of a boom. So we're getting a little bit of a cross-current in the data, but it's been stable. That's the thing that I want to emphasize. That to me, there's not a lot of evidence that the job market is deteriorating in any rapid basis.
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Steve Liesman1:45
All right. Let's go to the other side of the mandate, the inflation side. It has been elevated. Is it all energy? And are you willing just to look through it? Or is there a more stern response from the central bank required here?
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Austan Goolsbee1:58
Well, that's two questions. The second one, let's hold off for a second. I don't think it's just energy. Energy is adding on to it. It's more than just that inflation is elevated. It was already elevated before the war. Then the war increased oil prices. Now it's even more elevated. I think to me, the most concerning part is that if you look at services inflation, that's not coming from tariffs. That's not coming from oil prices. It's for several months in a row now been higher than is comfortable and going the wrong way. And to pile that on, we've been above the 2% Fed target for five years now. We stopped making progress last year and now in the last three months it's going up instead of down. We got to just keep an eye on this because if everybody starts presuming that inflation rates are going back to something like what they were a few years ago, we would be in a bit of a pickle as a central bank.
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Steve Liesman3:10
Fed Chair nominee says has repeated several times, inflation is a choice. And I'm assuming by that metric that you guys are making the wrong choice. If inflation is continuously above target, are you thinking about whether or not you need to make a choice to address that inflation?
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Austan Goolsbee3:27
Yeah. Look, as I say, and Steve, you've been there to the room where the FOMC meeting takes place. It's literally the biggest table that I've ever seen in my life. So there's plenty of room on the table. Everything should always be on the table. That said, we outlined as a committee, if we faced threats to both sides of the mandate at the same time, we voted unanimously on a monetary policy framework that said, if we start facing that kind of stagflationary shock, we're going to look at which side is deviating more and how long we think the deviations are going to last. And you're seeing problems on the inflation side. But there is an argument that these should be one-time increases in prices and not lasting inflation shocks. That's what we're trying to figure out. That we're piling an oil one on to the tariff one before the tariff one went away, I'm a little concerned about. But for me, that idea that let's figure out not just which one is getting worse, but how long do we think it's going to last? That's a core of what I'm trying to figure out.
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Steve Liesman4:43
Austan, do you think that the Fed ought to remove that guidance, which people say is the guidance that suggests the next move is a rate cut? And will it matter if you remove that guidance? Is that essentially, should it be seen in your mind as a tightening of policy?
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Austan Goolsbee4:58
And Steve, as you know, before I ever got to the Fed a little over three years ago, I was a little skeptical about the use of forward guidance in the statement as a way of making policy. I can understand it when you're at the zero lower bound, so you really can't make policy. But we're not at the zero lower bound by any means. So I have never been that big of a fan of trying to use words to jawbone policy decisions.
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Sarah5:33
Hi President Goolsbee, it's Sarah. How are you guys judging inflation right now? Are you looking only at core? Are you stripping out food and energy? And can you just talk us through that. We're going to get CPI on Tuesday. I mean, what people pay for is food and energy. So I am curious to know how you're thinking.
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Austan Goolsbee5:51
As I say, I understand why in general the Fed tends to look at core because it gives you a—it's not as variable and it gives you a little bit of a better insight into what's a through line. And that's the most important thing is what's a through line. But the fact that that is mostly what we look at drives my mom crazy. Drives a bunch of—what do you mean you don't look at energy and food prices? That's all we look at. I think you're never going to hear me say, throw out any data. We should look at food and energy and core. We should within core look at services separate from housing, separate from goods. And we should be incorporating all the private sector information that we can about prices. I just want to be one of the data dogs. And one of the main rules of the data dogs is sniff every piece of data that hits the floor because it might be food. And I think that's what we should do. And I thought in his hearing, Chair Designate Warsh said something that sounded like that, that let's look at a lot of different measures of inflation rather than just key on one. And I strongly agree with that.
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Sarah7:04
I'm also curious how you think the massive amount of spending into AI and building out the AI infrastructure is influencing inflation. Some people say it's deflationary, it's boosting productivity. But right now, I mean, there's a lot of money going into building this all out. And it's not just in high tech, it's in the industrial part of the economy as well.
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Austan Goolsbee7:28
Yeah, you're not wrong about that. And look, just on your previous segment, there was that lovely phrase, is the AI trade superseding the economy trade. I want us to just be a little careful at moments like that. If what's happening with AI is there's going to be a huge increase in productivity, but it's not here yet. The more people expect it and hype it, the bigger the threat that we could overheat the economy in the short run as everybody's trying to pull forward. Where we get a wealth effect that consumers are going to spend out of this—high-end consumers who have big increase in stock market wealth are going to increase their consumption and their consumer spending before the economic potential and the bounty of this thing has arrived in the economy. We got to be careful about that.
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Steve Liesman8:24
Yeah. So, Austan, you just wrote a paper on this, and I was trying to spare viewers from having to talk about it, but if I could...
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Austan Goolsbee8:32
I could. Thanks a lot.
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Steve Liesman8:33
Yeah, well, it's an interesting academic paper if you're into that sort of thing. But if I could sum it up, it seems like what you're saying is, when it comes to monetary policy, the thing you're saying is don't count your chickens before they hatch. And so you sound like you would be reluctant to incorporate potential productivity gains on the front end of monetary policy now, but not necessarily on the back end if they show up. And it's also important how they show up.
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Austan Goolsbee9:05
Yes, I think all of those statements are—I agree with. If what happens is like the mid-1990s where we get productivity growth and it wasn't expected and people didn't change their behavior in the expectation that they were going to get these productivity gains, I think inflation goes down. And the natural thing is for rates to go down. What matters is how much does the knowledge of what's coming affect our behavior. We consumers, we businesses making these investments. And the more you see this kind of crowding out, like AI data center investment driving all the non-AI industries crazy—we can't hire an electrician, we can't buy computer chips, the price of land is going through the roof—those are kind of the embodiment of the people getting excited, equity values getting ahead of getting into the counting of the chickens. And we just got to be mindful whether that is going to lead to overheating in the short run.