Chicago Fed President Austan Goolsbee Talks Jobs Report, Stagflationary Concerns

Summary

Podcast Summary

Podcast: Bloomberg Talks
Host: Bloomberg
Guest: Austan Goolsbee (President, Chicago Federal Reserve)
Episode: Chicago Fed President Austan Goolsbee Talks Jobs Report, Stagflationary Concerns
Date: March 6, 2026

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Episode Overview

This episode features an insightful conversation with Austan Goolsbee, President of the Chicago Federal Reserve, focusing on the latest US jobs report, ongoing inflationary pressures, concerns over stagflation, and how the Fed is responding to economic uncertainties. Goolsbee offers a candid assessment of the labor market, inflation data, and explains the complexities in the central bank's current decision-making.

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Key Discussion Points & Insights

1. Jobs Report & Labor Market Dynamics

• Recent Jobs Data:

  • Goolsbee refers to the latest jobs report as a "tough mess," urging caution in overreacting to one month's data ([00:53]).
    • “You never want to over index on one month's report.” (D, [00:53])
  • Emphasizes the impact of factors like immigration and population growth, cautioning not to focus solely on total payroll employment.

• Labor Market Conditions:

  • Unemployment uptick is noted as concerning if it becomes a multi-month trend.
  • Strange combination of “low hiring simultaneously with low layoffs” is highlighted, attributed to uncertainty in the market ([01:40]).

2. Fed Outlook & Policy Stance

• Interest Rate Cuts Discussion:
  • Goolsbee is non-committal about imminent rate moves, indicating that uncertainty and mixed data make it difficult to set clear policy guidance ([01:40]-[02:50]).
    • “Each time we add an uncertainty. I think the time at which it makes sense to act keeps getting pushed back.” (D, [02:28])
    • Introduces the “data dogs” analogy: “There's a time for sniffing and there's a time for walking. And when there's uncertainty... that's the time for sniffing.” (D, [03:16])
  • Won’t rule out actions at upcoming meetings, preferring to remain data-dependent.

3. Inflation & Stagflationary Concerns

• Inflation Data:

  • Goolsbee notes inflation is “disturbingly high in non-tariff categories like services” ([01:59]).
  • Consumer spending remains the economy’s backbone, rather than investment in areas like data centers.
  • Expresses hope for progress toward the 2% inflation target by year’s end, but acknowledges persistent challenges.

• Oil Prices & Stagflation:

  • Rising oil prices are flagged as a classic supply shock, potentially leading to stagflation (rising inflation + worsening labor market) ([03:54]).
    • “That's always the... worst case scenario for the central bank because there's not an obvious monetary policy answer to a stagflationary shock.” (D, [04:09])

4. Interpreting Inflation Metrics

• On PCE Inflation:
  • Goolsbee is watching the upcoming PCE report for clues on whether inflation is “residual tariff” or a deeper issue ([05:36]).
    • Persistent services inflation is flagged as especially troublesome and not easily explained by tariffs.
    • “If it comes in hot and it's just goods, I would be more comfortable saying that looks more like a tariff driven thing... But it's heavily on health care, a bunch of service sector industries. That's a different kettle of fish.” (D, [06:45])

5. Consumer Sentiment vs. Spending

• Breaking the Link:
  • Historically, higher gas prices dampen consumer sentiment, but actual spending has remained strong despite worsening sentiment in recent years ([07:56]).
    • “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.” (D, [08:01])
  • If people start to worry about job security, watch for increases in the savings rate as a signal for retrenchment.

6. Positive Note on Productivity

• Recent Gains:
  • Productivity growth of 2.8% in Q4 is encouraging ([09:46]).
    • “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.” (D, [09:50])
  • Goolsbee doubts AI adoption is solely responsible, suggesting more room for gains remains.

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Notable Quotes & Memorable Moments

• On Decision-Making in Uncertainty:

  • “Each time we add an uncertainty... the time at which it makes sense to act keeps getting pushed back.” (D, [02:28])

• On Data Dogs:

  • “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... that's the time for sniffing.” (D, [03:16])
  • Host jokes about bringing back the “data dogs” analogy, suggesting naming them in future ([03:40], [10:20]).

• On Productivity:

  • “All of our inner economists are getting a little bit of a warm glow. Productivity growth is what makes us rich.” (D, [09:50])

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Timestamps for Important Segments

• Jobs Report Analysis: [00:53] – [01:26]
• Fed Policy & Rate Cuts Outlook: [01:26] – [03:16]
• Oil Prices & Stagflation Risks: [03:40] – [04:41]
• PCE Inflation Discussion: [05:36] – [07:28]
• Consumer Sentiment vs. Spending: [07:28] – [09:36]
• Productivity Gains & Optimism: [09:36] – [10:20]

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Tone & Style

Goolsbee’s tone is pragmatic and measured, sprinkled with humor (particularly with the “data dogs” analogy), yet remains cautious and focused on underlying trends and emerging risks.

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Useful Takeaways for Listeners

• The current economic climate is marked by conflicting signals: an odd jobs report, persistent inflation (especially in services), and worries about stagflation, but also strong consumer spending and promising productivity gains.
• The Fed is particularly data-driven right now, hesitant to commit to rate moves amid uncertainty, and looking closely at upcoming inflation data for clearer direction.
• Listeners are reminded that links between sentiment and spending can break down, so watching actual consumer behavior is key.

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End of Summary

Transcript

[A]

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[B]

Bloomberg Audio Studios Podcasts Radio news welcome back to

[C]

Bloomberg Radio and television viewers and listeners around the world. Our guest this morning now Austan Goolsbee, the president of the Chicago Federal Reserve and of course everybody wants to know what the Fed's going to do. The Fed's worried about jobs and today you had a number to worry about.

[D]

Yeah, it's a tough mess on the jobs report today. You never want to 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. It's not a trend but it's, it's not a good month. If you got several months like that, it would be, that'd be a concerning spot for the labor market.

[C]

Well, what's your feeling about what the Open Market Committee is going to do? I know you've been waiting to see data. Chris Waller has been saying he's still in favor of cutting, as is Stephen Myron. Where do you come down now?

[D]

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 a 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 a kind of 3% and 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 state of 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 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 and you're getting conflicting data points, that's the time for sniffing.

[C]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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[B]

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