Austin Goolsbee Talks Inflation Risk, Tariffs, Powell

Summary

---

Podcast Summary: Bloomberg Talks — "Austin Goolsbee Talks Inflation Risk, Tariffs, Powell"

Date: February 24, 2026
Host: Bloomberg
Guest: Austan Goolsbee, President of the Chicago Fed

---

Main Theme & Purpose

This episode features a timely conversation with Austan Goolsbee, President of the Chicago Federal Reserve, centering on the current state and future outlook of the U.S. economy. Discussions focus on inflation concerns, the impact of tariffs, policy uncertainties, labor market dynamics, Federal Reserve leadership changes, and the challenges facing monetary policy in 2026.

---

Key Discussion Points & Insights

Inflation Takes Center Stage

• Primary Concern: Goolsbee identifies persistent inflation as the central economic risk, even as labor markets and growth appear stable.

  • "Inflation's ... never gone away as a central focus. ... I’m not hawkish about rates. I’m pretty optimistic that we can get rates down further — multiple cuts in 2026 — as long as we see the progress on inflation." (01:44)

• Inflation Target Slippage: The host notes, and Goolsbee concurs, that Fed forecasts continually push the return to the 2% inflation target further into the future.

  • "Every time you put out a summary of economic projections ... the 2% target gets hit two years from now. The next, it's two years from now." (03:02)

• Tariff Impact: Tariff-related inflation was supposed to be transitory. Goolsbee stresses the need for actual progress towards the inflation target rather than just rhetorical confidence.

  • "If the tariff inflation is transitory, it’s supposed to start going away. ... We must get inflation down from this 3% level that we’ve been stalled out at for now, a year or more." (03:08–04:40)

Policy Uncertainty and Labor Market Effects

• Uncertainty Weighs on Decisions: Ongoing legal and policy shifts — especially around tariffs and trade — fuel business caution, especially in hiring.

  • "The thing to remember about the tariffs, even if the tariffs stay exactly as they were ... the inflation impact is supposed to go away." (05:14)
  • "Low hiring with high layoffs, that's what the beginning of a recession looks like. For both of those to be low is a bit of a weird duck ... explained by a lot of 'we want to wait and see what's going to happen.'" (05:14–06:40)

• CEO Sentiment: Businesses, notably in auto manufacturing (a key Chicago Fed district industry), want regulatory clarity before making hiring decisions.

  • "What they tend to say is we want to know what the rules of the road are going to be. And right now, we don't know ..." (06:47)

Sector-Specific Labor Trends

• Diverse Outlooks: Labor demand varies by industry.
  • Tech firms face AI-driven uncertainty about staffing; healthcare is booming and still hiring robustly.
  • "If you talk to software companies ... the only uncertainty is, should we not hire, or should we actually let people go? But if you look in the health care sector—it’s a booming sector. Employment continues to expand ..." (08:36)

Productivity, AI, and Inflation

• Optimism and Caution: The new incoming Fed chair, Kevin Warsh, is bullish on AI-driven productivity increases taming inflation. Goolsbee is more circumspect.
  • "Productivity growth is the thing that makes us rich ... It can be deflationary. At the same time ... people counting on future productivity growth can overheat the economy just in the near term." (09:37)
  • "I mostly agree [with Warsh], but ... we just got to think about some of those [secondary] issues." (10:32)

Federal Reserve Forecasting and Policy Regimes

• Summary of Economic Projections: Goolsbee admits current levels of economic uncertainty make confident forecasting difficult.

  • "There’s a lot of uncertainty and we have to make decisions with the data we have. ... I take my own views and that of my staff with a heavy grain of salt." (11:16)

• Monetary Policy Debate: The possibility of reverting to a "scarce reserves" model for monetary policy management is discussed.

  • "We should constantly be evaluating as a body what we’re doing and the efficacy ... We switched out ... to what we do now because in crisis there were some holes in a scarce reserves regime." (12:29)

Fed Leadership & Succession

• Jay Powell’s Legacy: Goolsbee is a strong supporter of Fed Chair Jay Powell as his term nears its end.
  • "I’ve said unapologetically, I think Jay Powell is a first ballot hall of fame Fed chair and, and I’m a big supporter of his." (13:46)
  • "I like him being around, for sure." (14:20)

---

Notable Quotes & Memorable Moments

• On Inflation’s Stubbornness:

  • “We must get inflation down from this 3% level that we’ve been stalled out at for now, a year or more.” — Austan Goolsbee (04:28)

• On Policy Uncertainty:

  • “...the low hiring, low firing environment is what you would expect when there’s a lot of uncertainty. That’s not really what the beginning of a recession looks like. For both of those to be low is a bit of a weird duck.” — Austan Goolsbee (06:00)

• AI & Productivity:

  • “Productivity growth is the thing that makes us rich. ... It can be deflationary. At the same time, people counting on future productivity growth can overheat the economy just in the near term.” — Austan Goolsbee (09:40)

• On Jay Powell:

  • “I’ve said unapologetically, I think Jay Powell is a first ballot hall of fame Fed chair and, and I’m a big supporter of his.” — Austan Goolsbee (13:46)

• Humorous Local Touch:

  • "Wherever they build a stadium, they better be called the Chicago Bears. But where the public financing, that's out of the Fed's lane." — Austan Goolsbee (14:55)

---

Timestamps for Important Segments

• 01:14 – Inflation as the Fed’s top concern
• 03:07 – The problem with forecasts and the moving 2% target
• 05:14 – Tariffs, Supreme Court uncertainty, and labor trends
• 06:47 – CEO perspectives on policy uncertainty
• 08:36 – Industry-specific labor market trends (AI, tech, healthcare)
• 09:37 – AI, productivity, and potential impacts on inflation
• 10:55 – Challenges with Fed forecasting amidst uncertainty
• 12:29 – Discussion on possible return to “scarce reserves” regime
• 13:46 – Goolsbee’s views on Fed leadership succession and Powell
• 14:55 – Quick take on the Chicago Bears’ stadium debate

---

Tone and Language

Throughout, the conversation is candid, accessible, and policy-focused, with Goolsbee balancing a tone of empirical caution and optimism. He repeatedly emphasizes the importance of data, the unusual nature of the current economic moment, and his respect for both current and incoming Fed leadership.

---

This summary provides a comprehensive guide to the episode for listeners interested in central bank strategy, current economic challenges, and the leadership direction of the Federal Reserve in 2026, all in the original, conversational style of the speakers.

Transcript

[Public.com Advertiser]

Support for the show comes from Public. Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by

[Bloomberg Host]

Public Holdings Brokerage Services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by

[Public.com Advertiser]

ZeroHash all investing involves risk of loss.

[Bloomberg Host]

See complete [e-mail] Disclosures

[Bloomberg Studio Announcer]

Bloomberg Audio Studios Podcasts Radio News well, thank you very

[Bloomberg Host]

much and we'd like to welcome all our viewers and listeners around the world to Bloomberg Radio and Television. And we'd like to welcome Austan Goolsbee.

[Austan Goolsbee]

Thank you for having me.

[Bloomberg Host]

Bloomberg Radio and Television I want to start with the next meeting and the meetings beyond because that's the general focus of the folks on trading desks. Coming out of the last two years, the focus seemed to be on the unemployment rate, on the labor market and cutting rates to get ahead of a problem with the labor market. But listening to you this morning, it sounds like you're more concerned about inflation, that inflation may have become the primary risk.

[Austan Goolsbee]

Yeah, I would say in my head in 23 and 24, since I've been on the Fed, inflation's been had, has never gone away as a, as a central focus. When the labor market is deteriorating, it comes back in a, in a major way. But I'm a little more concerned about inflation right now because I think the job market is pretty steady. I think growth is pretty steady. I think there's some promising stuff in the inflation reports, but there's also some warning signs. So as I say, I'm not hawkish about rates. I'm pretty optimistic that we can get rates down further multiple cuts in 2026 as long as we see the progress on inflation that forecasters have been forecasting, that it's supposed to start coming down. And I just want us to see some progress on that front both and not get ahead of ourselves.

[Bloomberg Host]

Well, you talked about that a little bit and it's a question I asked Jay Powell Once is, it seems like every time you put out a summary of economic projections, the economic outlook by the various members of the Open market committee, the 2% target gets hit two years from now. The next, it's two years from now.

[Austan Goolsbee]

Exactly.

[Bloomberg Host]

So what goes wrong?

[Austan Goolsbee]

That's a lot of things can go wrong. In this case. What I want to make sure is not going wrong is that we, we need inflation not to be persistent. When the part of inflation that has come from tariffs is supposed to go away is supposed to be transitory. And when you see things like the forecasts say inflation is going to peak out and then start falling by the end of 2025, and then that moves the goalpost, well, maybe it'll be 1Q26. And now they're saying, well, maybe it will be 2Q26. That's not a great sign. We need to see, we should see, especially on the good side, if the tariff inflation is transitory, it's supposed to start going away. And as soon as we start getting some evidence that we're back on the path to 2%, as I say, I think rates can still keep going down. And if you look at the, at the SVP dot plot, a large group of the committee thinks that where rates will eventually settle is still well below where we are today. It's just we, we must get inflation down from this 3% level that we've been stalled out at for now, a year or more.

[Bloomberg Host]

Well, now you've got this whole new tariff uncertainty from the Supreme Court. President's going to impose what he started today, a 10% tariff. Universally brings down the tariff rate some, but they say they're going to use other means to get the tariff rates back up to about where they were. So now you'll have this dip, perhaps in inflation, and then it could go back out again. So you said you want to see inflation going down. Does that get pushed out? Does it become later in this year when you can even think about it?

[Austan Goolsbee]

I think when I'm out in this seventh District in the Midwest talking to folks, they talk a lot about uncertainty, policy uncertainties, geopolitical uncertainties. The thing to remember about the tariffs, even if the tariffs stay exactly as they were, just in a different form, the inflation impact is supposed to go away. So if the rates are lower than what they were before, that should be even, that should make it even more true that we should see the inflation going down. I think that the policy, policy uncertainty, we're seeing more on the labor side, I think the low hiring, low firing environment is what you would expect when there's a lot of uncertainty. That's not really what the beginning of a recession looks like. Low hiring with high layoffs, that's what the beginning of a recession looks like. For both of those to be low is a bit of a weird duck and I think is explained by a lot of we want to wait and see what's going to happen. And so if you have question marks coming from the Supreme Court, coming from other policy responses, I think you're likely to see continuation of that low hiring, low firing environment.

[Bloomberg Host]

Well, what are CEOs telling you they want to see before they would be willing to hire again?

[Austan Goolsbee]

What, what they tend to say is we want to know what the rules of the road are going to be. And right now we don't know what the rules of the road are going to be. And there could be very significant changes. And look, I'm sympathetic with that. The rules are moving around if you're in a business like the auto industry are. The Chicago Fed district has by far the most auto production in the United States. It's a global supply chain for the auto industries. They're very amped up about what will be the treatment of parts, components, supplies that they use to make the cars. So far they were pleasantly surprised that anything USMCA compliant was kind of exempted. Now, if the rumors are to be true that whatever they might renegotiate the USMCA or would Canada be in the usmca, of course that's what they're going to express, uncertainty about things like that, and it's going to affect their decisions in the short run, over the long run. As I say, I still think the American consumer has been pretty solid. So we've got a steady job market. If we make progress on inflation, I think rates are, are trending now.

[Bloomberg Host]

Well, we've seen productivity rise a little bit in the last couple of months. When you look at what the companies are telling you, are they saying maybe we don't need to hire as many people because we're getting this job done, we're keeping, you know, up with orders some.

[Austan Goolsbee]

I mean, the economy is extremely diverse. And the answer to the question of what are the labor market prospects and do they need to hire depends very much on the industry. If you talk to software companies, a lot of them are saying, hey, the AI technologies, there's some uncertainty, but the only uncertainty is should we not hire or should we actually let people go? But if you look in the health care sector, It's a booming sector. Employment continues to expand in that sector. And you, you don't hear some of those. So the answer to that depends a lot on who you're talking to.

[Bloomberg Host]

Well, productivity is going to be a big issue for the Fed coming up with new chairman coming in, Kevin Warsh, who's pretty much wed to the idea that AI is going to create a lot of additional productivity which will bring inflation down. Now, having talked to you, I know that you're not as sure about that.

[Austan Goolsbee]

Yeah, look, I, I hope that, that, that is what happens. Let's remember productivity growth is the thing that makes us rich. So if we get high productivity growth, incomes are going to go up. There are a balance of things that happen when productivity goes up, though, that, that we should remember. It can be deflationary. At the same time, it can stem and you have seen, can stimulate a lot of investment. And in the short run, people counting on future productivity growth can overheat the economy just in the near term. And as you go around the country, you hear a lot of discussion about data center investment demand, using up all the H Vac people, buying up all the electrical equipment, using up computer chips, and in a way making prices higher for the rest of the economy. We just got to think about some of those issues. What, what are the implications of high productivity growth? But overall, I, if that is Kevin Wash, his position, I've known him a long time, I respect him a great deal. I mostly agree with him.

[Bloomberg Host]

Now, in March, you have to come up with a new summary of economic projections, a set of forecasts for where you think the economy will go. You're probably going to be waiting a while till you have to actually put those on paper. But let me ask this. How much confidence are you going to have given everything that's going on right now in the numbers you put down?

[Austan Goolsbee]

Do you want to view that as much confidence as we ever have, or it's not very much confidence? Both of those can be true. There's a lot of uncertainty and we have to make decisions with the data we have. So I take my own views and that of my staff with a heavy grain of salt. When things are changing a lot. We've seen in the last three years unexpected, unprecedented shocks hitting us. I'm sure we'll get some more in 26. But as I say, I'm still optimistic that we're basically cruising along with solid growth, a steady labor market. We've got some encouraging and some discouraging signs coming on the inflation side. If we can just get some improvement. I feel like we could still get back on the golden path that we were on before.

[Bloomberg Host]

Another Kevin Warsh idea is that the Fed should go back to a scarce reserves way of managing monetary policy. Would you support that?

[Austan Goolsbee]

We should. We should constantly be evaluating as a body what we're doing and the efficacy of doing that. We switched out of that scarce reserves based regime to what we do now because in crisis there were some holes in a scarce reserves regime. It's possible we should study it, we should contemplate it. If we're going to seriously think about doing that. We probably do want to revisit some of the, some of the logic of how we got to where we are now and moved away from that.

[Bloomberg Host]

Coming up is Jay Powell's. In theory, he'll leave the chairmanship. He could stay on the board. A lot of people looked at the last decision and noted that in January you always choose the chairman for the rest of the year for the Open Market Committee. And that's what you did this time instead of as has been done in the past saying chairman until successor is in place. If Kevin Wash is not confirmed by then, would you support Jay Powell remaining as chairman of the Open Market Committee?

[Austan Goolsbee]

I don't know. It sounds like you have a lot more expertise on the, the language of these decisions. I, I've said unapologetically, I think Jay Powell is a first ballot hall of fame Fed chair and, and I'm a big supporter of his. I don't know what the, what the rules are when people's terms expire. As chair, are they allowed to stay on? If they are, I'm, I'm a, I'm a big Jay Powell supporter.

[Bloomberg Host]

Well, Jay Powell can stay on as a governor, certainly. And would you like to see him do that?

[Austan Goolsbee]

I don't know. I like, I like being him, being around for sure.

[Bloomberg Host]

So you're not going to, have you talked to him about it at all?

[Austan Goolsbee]

I haven't talked to him about that. It's not, it's not my place. You know, the rules of the thing are we speak only for ourselves. We're not supposed to talk about what anybody else's thoughts are, opinions or speak for the committee. So I don't really have a thing to add on.

[Bloomberg Host]

Last question. All politics are local. For the Chicago district, this is a message for you. Do you support the Bears going to Indiana?

[Austan Goolsbee]

Look to the Chicago Bears. Wherever they build a stadium, they better be called the Chicago Bears. But where the public financing that's out of the Feds. That's out of the Fed's lane.

[Bloomberg Host]

Save the toughest question for last.

[Bloomberg Studio Announcer]

Exactly.

[Bloomberg Host]

Austan Goolsbee, thank you very much, the president of the Chicago Fed.

[Bloomberg Studio Announcer]

These days, it seems like AI Agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity. Secure every agent, Secure any agent. Okta secures AI.