C (3:40)

I'm sure everyone out there is very glad to hear you bring back the data dogs. It's been a while since we've heard that. Speaking of data dogs, one dog that is barking very loudly right now is oil prices. But the Fed tends to look through that.

D (3:54)

Yes. I mean, as with any supply side shock, it can lead you in a stagflationary direction, which is to say the, 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, 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 going to be temporary, is this going to be long lived, how much, 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?

C (4:41)

I would assume that you would assume that March is not going to see March 18th is not going to see any kind of rate move because there's still too much uncertainty. Do you think you would have enough data by April to even make a decision one way or another?

D (4:57)

You know that I don't like and you, you assume that I assume I don't know what would a data. You know, I don't like tying our hands ahead of the meetings. I want to hear what my colleagues have to say. I want to get as much information as possible, especially at moments like this where we're getting conflicting pieces of information. But you've been there. It's the biggest table that I've ever seen in my life in that FOMC room. So there's plenty of room for everything to be on the table at every meeting. So I'm not going to rule anything out.

C (5:36)

We are from the data that we already have and other Fed officials have said this Expecting a bad PCE number. Are you still thinking of that PC inflation as residual tariff as opposed to an underlying fundamental problem with inflation?

D (5:56)

Maybe a little of both. I mean, that's why I've been uncertain and highlighting the, the inflation numbers. There's been some encouraging signs in inflation. Housing inflation has come down a lot and is likely to continue to come down. We had the run up of goods inflation that I think a lot of it is tied to tariffs. And we're still trying to sort out is there more to come or is that basically all there was with tariffs and then it'll go away. But there's also been a kind of a disturbing persistence of services inflation which I don't think you can attribute to tariffs because the tariff content of the services industry is not very high. So we'll have to see what the PCE number says. The Open Market Committee has said we watch PCE inflation. That's in our framework review. That's the best measure that we have of inflation, I think. And if it comes in hot and it's just goods, I would be more comfortable saying that looks more like a tariff driven thing. And that's the optimist case, maybe that it would prove transitory if it comes in hot. But it's heavily on health care, a bunch of service sector industries. That's a different kettle of fish. And that's a little more, that feels a little more persistent.

C (7:28)

A sentiment question. The sentiment you get not just from CEOs but also from just talking to regular people in your district. You've got a situation where people are seeing gas prices go up and up and up. And now you have a really bad employment report. At a time when people have already said they're worried about losing their jobs. Are you concerned that this could tip us into, into the stagflationary environment? I don't want to say recession yet, but could cause people to pull back.

D (7:56)

It might cause people to pull back the last five to eight years. However, there's been a breaking of the link between consumer sentiment and actual consumer spending for some reasons we understand and some reasons we don't understand. So if you saw deterioration of consumer sentiment as say gas prices go up, which historically when gas prices go up, consumer sentiment goes down. If that did not translate into a slowing of consumer spending, I would be much less nervous. As I've highlighted in 2025, the strongest thing that we have going for us was not AI data center investment. Yeah, that was great. But the main thing driving growth was a strong, stable consumer broad based spending which drove growth in the country and that still continues until it doesn't. So if sentiment deteriorated and there's a lot of concern as I'm going around the Midwest and the Chicago Fed district, lot of expression of concern about affordability, about costs on the both the business side and the consumer side. If people begin to be nervous about their employment, historically that tends to show up as they're trying to build a little precautionary buffer. So the savings rate would start to rise. That would be a thing to watch out for.

C (9:36)

Let's end on a little bit of a positive note here. Productivity down from the third quarter, but still 2.8% for the fourth quarter. That's got to be something that makes you feel a little bit better.

D (9:46)

Yeah, all of our inner economists are getting a little bit of a warm glow. Productivity growth is what makes us rich. Incomes can go up, wages can grow faster without inflation if productivity growth is going to remain high like this. So I don't think that the adoption of AI has been big enough to explain that number completely. So I think there actually might be even some more running room to go with the productivity.

C (10:20)

Austan Goolsbee, thank you very much. We'll have you back and have a name. The Data Dogs contest. That's right. President of the Chicago Fed.

A (10:27)

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B (10:57)

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