A Federal Reserve president thinks fears of a 1970s-style stagflation are overblown
Speaking at the Aspen Ideas Festival in Colorado, the president of the Federal Reserve Bank of Chicago, Austan Goolsbee, pushed back on concerns that recent supply-side shocks, like tariffs and global military conflicts, could trigger a return to an era of double-digit inflation and sky-high joblessness.
Goolsbee said that with unemployment near 4% and inflation around 2.5% and falling, he sees no possibility that tariffs or another supply-side shock could cause actual 1970s-style stagflation in the near term, referring to a time when inflation topped 13% and unemployment exceeded 8%.
"There's definitely the possibility of both things getting worse at the same time," Goolsbee added, referring to inflation and unemployment. "And there you usually say, well, how long is each side's discrepancy going to last? Do you think it's temporary or do you think it's permanent? And how big is each side... that's the way I think about it."
Goolsbee offered no forecast, but his remarks come as the Federal Reserve continues to hold interest rates in an effort to bring inflation back to its 2% target.
While core inflation, which excludes more volatile prices like food and energy, is down from its 2022 peak, it has remained sticky in key sectors like housing and services.
Despite mounting pressure from markets and President Donald Trump to cut rates, Jerome Powell, chair of the Federal Reserve, has said the agency needs to see stronger evidence that inflation is firmly under control, especially after several months of higher-than-expected price indexes earlier this year.
In a post on Monday, Trump called the chair " Jerome 'Too Late' Powell" and said that people in the US "should be paying 1% Interest" in a social media post. The Trump administration is also looking into ways to replace Powell, though his term doesn't expire till next May. Powell's term as a member of the board of governors also doesn't expire until 2028.
The White House did not immediately respond to a request for comments.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
13 minutes ago
- Yahoo
Powell's Jackson Hole speech, Walmart earnings: What to watch this week
The investing world will turn its attention to northwestern Wyoming in the week ahead, with Federal Reserve Chair Jerome Powell set to give his most important policy speech of the year on Friday at the annual Jackson Hole Economic Symposium. Held each year at the Jackson Lake Lodge in Grand Teton National Park, the Kansas City Fed's annual meeting often serves as a crucial set piece in the Fed chair's calendar that signals key shifts in the central bank's thinking. Ahead of Powell's speech — likely to be his last as Fed chair — markets are placing the probability the Fed will cut rates by at least 0.25% next month at around 85%. Clues from Powell about the speed and depth of the cycle the Fed is about to embark on will be the week's biggest market-moving event. On the corporate calendar, results from Walmart (WMT), Target (TGT), and Home Depot (HD) highlight a slowing earnings schedule that sees the retail sector remain the key focus. And the economic data flow will be slow this week, with Thursday's updates on initial jobless claims and service sector activity the top highlights. Investors may also keep a closer eye than usual on the minutes from the Fed's July 30-31 meeting released Wednesday, which could offer more color on the decision from Fed governors Waller and Bowman to vote against the central bank's decision to keep rates unchanged in a range of 4.25%-4.50% last month. One more for the road In 2018, Jerome Powell addressed the Jackson Hole symposium for the first time as Fed chair, outlining his views on the key variables that central bankers wrestle with, elucidating his non-economist's view on the most technical aspects of monetary policy. In the intervening seven years, Powell has proven himself to be more of a pragmatist than a theoretician as he navigated 2018's false start on rate hikes, the COVID pandemic, the 2022 inflation shock, and the still-incomplete rate-cutting cycle that kicked off over a year ago. "The time has come for policy to adjust," Powell said last August. Rate cuts from the Fed in September, November, and December of last year have been on pause since. Growing dissent among his colleagues on the FOMC — and months of more forceful commentary from the White House — has seen Powell end up right where he stood a year ago. In his 2018 speech, Powell spoke at length about Alan Greenspan's decisions in the mid-90s to hold off on rate hikes, lauding the former Fed chair's "wait and see" approach and foretelling a preference to wait that has defined much of Powell's tenure. "Given what the economy has shown us over the past 15 years, the need for the sort of risk‑management approach that originated in the new-economy era is clearer than ever before," Powell said at the time. Barring the Fed's quick actions in March 2020, this line explains much of Powell's approach. As Powell gets set to end his time leading the Fed, the president has bestowed on him a nickname: "Too Late." "The diversity of views on the FOMC is one of the great virtues of our system," Powell said. "Despite differing views on these questions and others, we have a long institutional tradition of finding common ground in coalescing around a policy stance." In a year, a new Fed chair will address the crowd at Jackson Hole. Interest rates will likely be lower. But how this new chair views these tenets of central banking will be the more important answer for the future of the Federal Reserve. Retail's tale Retail sales rose 0.5% in July following a 0.9% jump in June. Economic data indicates US consumer spending has stabilizedafter tariff-related surprises this spring. How this information comes through in earnings reports scheduled for the week ahead will be one of the week's defining themes. Walmart's results Thursday morning, given the retailer's sheer size, will offer the broadest canvas for investors to work from. The company said in May that consumers remained "choiceful," with the company seeing growth across all income cohorts. Three months later, any signs of more confident spending will be welcomed by investors. Wall Street expects its US same-store sales rose 4% in its fiscal second quarter, according to Bloomberg data. In its fiscal first quarter, same-store sales rose 4.5% in the US. Walmart stock has gained over 10% this year, outperforming the S&P 500 by roughly a percentage point. At Target, questions over the company's leadership loom with shares of the retailer down over 20% this year. Home Depot, meanwhile, is navigating a US housing market some commentators have said is in recession, though interest rates have pointed to potential signs of a thaw in the coming months. Single-stock stories always stand at the ready to push around markets. Earnings from Nvidia on Aug. 27 will be another in this genre. But last week's market action showed investors starting to move past the daily headlines in an indication of a market finding firmer footing. "The bull market for stocks continued this week, and we've even seen some rotation out of the year's biggest winners into beaten down laggards like Health Care and homebuilders," Bespoke Investment Group wrote in its weekly letter to clients. "When momentum names stall or sell-off, it can really hit the major indices hard if no other areas of the market are there to pick up the slack, but this week, the year's worst performers finally saw some buying interest as investors rotated across the market instead of out of it." Like most things in modern life, the stock market story remains defined by easily digestible ideas like "Sell America" or acronymic memes like TACO. But the S&P 500 hit a record high this week. Twice. The absence of euphoric feelings from the investor class is another way to stamp this rally with a clean bill of health. And while the market has been driven by Big Tech and the AI trade, this week's market rotation shows investors acting on another one of the society's defining themes in 2025 — everybody gets a turn. Economic and earnings calendar Monday Economic data: NAHB homebuilder sentiment, August (34 expected, 33 previously) Earnings: Palo Alto Networks (PANW), Blink Charging (BLNK) Tuesday Economic data: Housing starts, July (-2.4% expected, +4.6% previously); Building permits, July (-0.2% expected, -0.1% previously) Earnings: Home Depot (HD), XPeng (XPEV), Medtronic (MDT), Amer Sports (AS), Toll Brothers (TOL), La-Z-Boy (LZB) Wednesday Economic data: FOMC Minutes, July 30-31 meeting; MBA weekly mortgage applications (+10.9% previously) Earnings: Target (TGT), Baidu (BIDU), Lowe's (LOW), TJX Companies (TJX), Estée Lauder (EL) Thursday Economic data: Initial jobless claims, week of Aug. 16 (224,000 previously); S&P Global US manufacturing PMI, August preliminary (49.8 previously); S&P Global US services PMI, August preliminary (55.7 previously); Existing home sales, July (-0.8% expected, -2.7% previously) Earnings: Walmart (WMT), Intuit (INTU), Workday (WDAY), Ross Stores (ROST), Zoom (ZM) Friday Economic data: Federal Reserve Chair Jerome Powell speaks at the Jackson Hole Economic Symposium Earnings: BJ's Wholesale (BJ), Buckle (BKE) Click here for in-depth analysis of the latest stock market news and events moving stock prices
San Francisco Chronicle
15 minutes ago
- San Francisco Chronicle
European leaders to join Ukraine's Zelenskyy for White House meeting with Trump
KYIV (AP) — European and NATO leaders announced Sunday that they'll be joining President Volodymyr Zelenskyy in Washington for crucial talks with President Donald Trump, rallying around the Ukrainian leader after his exclusion from Trump's summit with Russian President Vladimir Putin. The remarkable move — with one European leader after another announcing that they'll be at Zelenskyy's side when he travels to the White House on Monday — was an apparent effort to ensure that the meeting goes better than the last one in February, when Trump berated the Ukrainian president in a heated Oval Office encounter. 'The Europeans are very afraid of the Oval Office scene being repeated and so they want to support Mr. Zelenskyy to the hilt,' said retired French Gen. Dominique Trinquand, a former head of France's military mission at the United Nations. 'It's a power struggle and a position of strength that might work with Trump," he said in a phone interview. The European leaders' presence at Zelenskyy's side, demonstrating Europe's support for Ukraine, could potentially help ease concerns in Kyiv and in other European capitals that Ukraine risks being railroaded into a peace deal that Trump says he wants to broker with Russia. It wasn't immediately clear whether all or just some of them would be taking part in the actual meeting with Trump. European Commission President Ursula von der Leyen announced on X that she will take part in the talks, "at the request of President Zelenskyy.' The secretary-general of the NATO military alliance, Mark Rutte, will also take part in the meeting, his press service said. The office of President Emmanuel Macron announced that the French leader will travel on Monday to Washington 'at the side of President Zelenskyy' although it didn't immediately specify that he'll be in the meeting. German Chancellor Friedrich Merz will also be part of the European group, but the statement from his office likewise didn't specify that he will be in the talks with Trump. The grouped trip underscored European leaders' determination to ensure that Europe has a voice in Trump's attempted peace-making, after the U.S. president's summit on Friday with Putin — to which Zelenskyy wasn't invited.
CNBC
16 minutes ago
- CNBC
Ukraine and allies left scrambling as Trump shifts toward Putin after Alaska summit
LONDON — Ukraine and its allies were scrambling Sunday to respond to President Donald Trump's apparent shift toward Vladimir Putin's hardline position after their summit in Alaska. European leaders announced that they would join Ukraine's Volodymyr Zelenskyy in Washington on Monday as they seek to navigate America's new approach to ending the war. Trump signaled Saturday that he was reversing his insistence on a ceasefire and instead pursuing a permanent peace deal — aligning the United States with the Kremlin rather than Kyiv and its European backers. As Ukraine and Europe work out how best to move forward, NATO Secretary General Mark Rutte, European Commission President Ursula von de Leyen, Finnish President Alexander Stubb and German Chancellor Friedrich Merz announced that they would be joining Zelenskyy, perhaps hoping to ensure there is no repeat of his last Oval Office meeting. "The trip will serve as an exchange of information" with Trump, Merz' office said. "The talks will address, among other things, security guarantees, territorial issues, and continued support for Ukraine in its defense against Russian aggression." The news came ahead of a virtual meeting of the so-called "coalition of the willing," which includes more than 30 countries working together to support Ukraine. While Trump's reversal on pursuing a ceasefire before fuller peace talks fueled alarm on the continent, he did appear to have taken a step toward another position more aligned with the wishes of Ukraine and Europe. Trump directly engaged with Zelenskyy and European leaders by phone early Saturday morning about the U.S. taking part in a potential NATO-like security guarantee for Ukraine as part of a deal with Russia, two senior administration officials and three sources familiar with the discussions told NBC News. "European and American security guarantees were discussed," one source familiar with the discussions said. "U.S. troops on the ground was not discussed or entertained by [Trump]." The security guarantees would be made in the scenario that Russia were to invade Ukraine, again, after a would-be peace deal, the sources said. The sources said that those protections, as discussed by the White House, would not include NATO membership — despite European leaders saying in a joint statement Saturday that Ukraine should be given the right to seek NATO membership. But it was clear that the summit had left Ukraine feeling uneasy. Zelenskyy warned that the Russian leader was complicating efforts to end the war by refusing to halt the brutal fighting before holding further talks. "Russia rebuffs numerous calls for a ceasefire and has not yet determined when it will stop the killing. This complicates the situation," Zelenskyy said in a post on X late Saturday. For civilians on the ground, still under Russian attack even as the diplomatic maneuvering played out, it was not just the substance but the optics of the Alaska talks that caused frustration. "I was hoping that the U.S. wouldn't roll out the red carpet to the enemy," Kyiv resident Natalya Lypei said Saturday. "How can you welcome a tyrant like this?"
