Morning Brew Daily – Episode Summary Episode Title: How the Fed Evaluates Inflation During a Shutdown, with the Chicago Fed President
Date: October 16, 2025
Hosts: Neal Freyman & Toby Howell
Guest: Austan Goolsbee, President of the Chicago Federal Reserve

Overview

In this special episode, hosts Neal Freyman and Toby Howell hold an in-depth conversation with Austan Goolsbee, President of the Chicago Fed and voting member of the Federal Open Market Committee (FOMC). The discussion centers around the challenges the Fed faces during a government data blackout, the current state of the labor market, pressures on central bank independence, and a rare behind-the-scenes look at Fed meetings. The latter part of the show touches on business headlines, including bank earnings, OpenAI’s controversial content move, and the rise of “protein-ified” products.

Key Discussion Points & Insights

1. The Data Blackout & Its Impact on the Fed (03:06–07:27)

• Inflation Data Delays:
  With the Consumer Price Index release postponed due to a government shutdown, Goolsbee describes the predicament as “a mess,” highlighting the Fed’s increased uncertainty in decision-making.

  • Quote (Austan Goolsbee, 03:33):
    “We always have to make a decision with imperfect information. But there's imperfect and then there's imperfect. If you don't have the information, it just adds more question marks, makes it harder to see.”

• Being a ‘Data Dog’:
  Goolsbee likens himself and other Fed officials to “data dogs”—hungry for any information that can guide policy decisions, and frustrated by its absence.

  • Memorable Moment (03:54):
    “Try not giving your dog food for the whole day and see how the dog reacts. You know, that's exactly how I feel.”

• The Rules for ‘Data Dogs’:

  • Know when to keep “sniffing” (collecting data) vs. when to “walk” (take action).
  • Examine every piece of available data, as any could prove vital—especially when traditional signals are murky.
    • Quote (04:14):
      “…sometimes sniff for more information. And sometimes you have the information, it’s time to start walking.”

• Challenges with Labor Market Data:
  Government statistics, including the jobs report, have become less reliable due to poor survey response rates and demographic shifts (e.g., baby boom retirements), complicating interpretation and increasing revisions.

2. How the Fed Analyzes Alternative Data (05:29–08:27)

• Alternative Indicators:
  When official data is sparse or unreliable, the Fed watches closely:

  • Unemployment rate
  • Job vacancy rate
  • Hiring rate
  • Layoff rate
  • These “Four Horsemen of the Truth” sometimes send mixed signals: The hiring rate shows weakness, but the layoff rate remains very low—a highly unusual combination.

• Quote (D, 08:30):
  “This low turnover is unusual. … If you were running a business and there was a lot of uncertainty, you wouldn't want to get rid of the people you have. … But you wouldn't be bringing on new people. You'd just be kind of waiting it out.”

3. Effects of AI on Labor Markets (07:27–08:27)

• AI’s Real-World Impact:
  While AI generates headlines about job displacement, Goolsbee contends its concrete effects are limited thus far, except possibly in some edge areas like recent computer science graduates.
  • “The things that AI is replacing so far are nowhere near the majority of the job market, not even close.”

4. On-the-Ground Insights: Midwest Business Reaction to Tariffs & Policy (09:02–12:38)

• Tariffs’ Local Impact:
  The Midwest, with significant manufacturing and agriculture, is highly exposed to international tariffs—making recent policy moves a major concern among regional business leaders.

  • Initial panic after tariffs was somewhat soothed by temporary exemptions, but Goolsbee notes renewed anxiety as protectionist measures return.

• Interest Rates & Major Sectors:
  Typically, rate-sensitive sectors (business investment, consumer durables, housing) would signal where the economic cycle stands:

  • Business investment is booming, likely due to AI and data center demand (not interest rates).
  • Consumer durables remain strong.
  • Housing construction is notably weak.

5. Fed Independence & Political Pressures (12:38–14:07)

• Political Attacks:
  The episode discusses political criticism of Fed members and attempts to influence their work. Despite outside noise, markets have not sharply reacted to this uncertainty.
  • Quote (Goolsbee, 13:01):
    “Central bank independence from political meddling … is extremely important. Every rich country of the world has that feature and a lot of poor countries … do not—and that's not a coincidence.”
  • Lack of independence, historically and internationally, correlates with runaway inflation.

6. Inside the FOMC: Decision-Making at the Fed (16:03–21:13)

• Black Box, Revealed:
  Goolsbee gives a rare, vivid description of the FOMC process:

  • Meetings occur in a “giant room, a huge table, biggest table I’ve ever seen. Shades come down. There's no. Nobody can spy. You can't bring in a phone.”

  • The first day is spent on economic analysis; the second focuses on rates and the official vote.

  • All members—even non-voters—speak their minds; proceedings are formal but deeply thoughtful.

  • Quote (Goolsbee, 16:04):
    “...it’s about the coolest thing in the entire world.”

  • Quote (Goolsbee, 16:44):
    “People take the job extremely seriously. Everybody speaks their piece whether you’re voting that meeting or not.”

• Voting Mechanics:
  Members verbally vote on predefined alternatives (dovish, hawkish, baseline). Dissenters state their reasons.

  • Quote (18:12):
    “They will have outlined three alternatives, Alternative A, B, and C…They just call out whoever are the voters.”

• Vibe in the Room:
  Despite public disagreements, meetings are not tense. Different perspectives are valued, and Chair Powell is credited with maintaining unity and focus.

  • “Chair Powell has been very good … at navigating a course that almost everybody can agree with almost all the time… I haven't detected it to be, to be tense.” (19:22)

• Powell’s Leadership Style:
  Goolsbee describes him as “very data driven," smart, persuasive with “excellent intuition.”

  • “I thought he's the first ballot hall of fame [Fed Chair].” (20:24)

7. Fed Communication – “Fed Speak” (21:20–22:18)

• Do They Get Training?
  Goolsbee jokes about “Fed speak,” where comments must be measured due to their impact on markets. He maintains a preference for candor:
  • Quote (21:39):
    “Volcker used to tell me, the Fed's job is to act, the market's job is to react, and let's not get the order mixed up.”

8. Fun Anecdotes & Personal Moments (22:18–23:07)

• Teaching in a Tux:
  Goolsbee shares that he once taught a class at UChicago in a tuxedo—on his wedding day.
  • Quote (D, 22:24):
    “It actually ended up working out okay because there wasn't that much for the groom to do on the morning of the wedding except just get nervous. … There's a picture of me teaching the thing…”

Notable Quotes & Memorable Moments

• On Data Blackout:
  “If you don't have the information, it just adds more question marks, makes it harder to see.” (03:33, Goolsbee)

• On Tariffs:
  “Their hair was absolutely on fire in April. Freaking out. If the rates are going to be this big, we're going to die.” (09:18, Goolsbee)

• On Central Bank Independence:
  “Inflation comes roaring back and it's easy to understand why if the sitting government can set the interest rate, they have incentives that are different than trying to prevent inflation from, from getting out of control.” (13:01, Goolsbee)

• On FOMC Meetings:
  “…I think that's the, the world's greatest deliberative body.” (16:44, Goolsbee)

• On Fed Chair Jerome Powell:
  “He's…very smart and persuasive and he's had excellent intuition at several points along the way here.” (20:24, Goolsbee)

• On Fed/Market Relationship:
  “Volcker used to tell me, the Fed's job is to act, the market's job is to react, and let's not get the order mixed up.” (21:39, Goolsbee)

Key Timestamps

• 03:06 – Introduction to the data blackout challenge
• 03:54 – How it feels to be a ‘hungry data dog’
• 07:27 – Discussion on AI's real impact on jobs
• 09:18 – Midwest business leaders react to tariffs
• 12:38 – Federal Reserve independence and political pressure
• 16:04 – Detailed description of FOMC meetings
• 18:12 – How the vote is conducted
• 19:22 – Dynamics and tone inside the meeting room
• 20:24 – Assessment of Chair Powell’s leadership
• 21:39 – Explanation of “Fed speak” and communications
• 22:24 – Goolsbee’s wedding day teaching anecdote

Post-Interview Headlines & Conversations

Earnings & Markets (23:31–27:15)

• Major US banks report robust quarters, yet some leaders (notably Jamie Dimon) express concerns about fragility and “cockroaches” lurking in private credit.
• Jamie Dimon: “When you see one cockroach, there are probably more.” (25:00)

OpenAI’s Erotic Content Controversy (27:15–28:12)

• OpenAI now allows adult users to generate erotica; Mark Cuban criticizes the decision, while CEO Sam Altman argues “we’re not the elected moral police of the world.”

Protein-Fortified Snacks (28:12–30:36)

• Pop Tarts, Doritos, Uncrustables, Starbucks: All jumping on the protein fortification trend as food companies strive to keep up with shifting consumer wellness priorities.
• “Are we entering a protein bubble?” muses Toby, with fiber possibly becoming the next trend.

Tone & Delivery Notes

• Conversational & Playful: The hosts keep a light, accessible tone with witty asides, even when digging into economic wonkery.
• Insightful but Approachable: Goolsbee explains complex Fed mechanisms plainly, interspersing technical substance with humorous metaphors and personal stories.
• Engaged Culture Commentary: The second half of the episode transitions smoothly from serious macro issues to lighter business and consumer trends.

This summary covers all substantive content from the episode, focusing on Goolsbee’s insights, the challenges facing the Fed during a data blackout, the real-world impact of tariffs and interest rates, and glimpses into central bank decision-making and leadership culture, as well as headline news.