Latest news with #AustanGoolsbee
USA Today
10 hours ago
- Business
- USA Today
Chicago Fed chief: Iowa, with its manufacturing and ag jobs, highly affected by tariffs
Chicago Fed chief: Iowa, with its manufacturing and ag jobs, highly affected by tariffs Show Caption Hide Caption Reaction from around the world as steel tariffs double "Strongly regret," and "unfair" were some of the reactions from trade partners around the world as the U.S. doubles tariffs on steel imports. Iowa's economy, heavily reliant on manufacturing and agriculture, is significantly impacted by tariff policy uncertainty. Slow population growth in Iowa poses challenges for job creation and business recruitment. Robust job market and solid wage growth are positive economic indicators, but concerns remain about potential trade wars and their impact on supply chains and agricultural incomes. Federal policy, particularly the Trump administration's on-again, off-again tariffs, has caused uncertainty in the U.S. and Iowa economy. Austan Goolsbee, president and CEO of the Chicago Federal Reserve, spoke with the Des Moines Register June 3 during a two-day Iowa visit about the impacts of tariffs and the strengths and weaknesses he sees in the current economy, and what he was hearing from Iowans during his time in the state. In a previous interview, you mentioned Michigan is the number one state affected by tariffs. Where does Iowa fall? By one analysis, Iowa was number four. ... But it's not a surprise. (There's) a lot of manufacturing, a lot of agriculture, both of which rely on supply and have a supply chain that relies on a lot of imported stuff and also heavily turned to export markets for their output. It was a topic of concern to everybody we were talking to in Iowa... We're seeing a lot of the major indicators in Iowa that show we are in an economic downturn. What are the short-term and long-term outlooks for Iowa's economy? (In the Midwest) we are more intensively agriculture manufacturing than the rest of the economy. So that means that historically we're a little more cyclical, we're more tied to the business cycle than the rest of the economy. So there is a lot of attention paid at the Federal Open Market Committee and elsewhere, looking at the canary in the coal mine of especially manufacturing or the more cyclical parts of the agriculture. That might make folks nervous if you're trying to figure out where are we in the business cycle, that you start seeing downturn signals coming from Iowa. The only complication (or) subtlety is that the COVID recession was very strange, and it wasn't driven by cyclical industries. It was driven by people not being able to spend money on services so health care and a bunch of things that are normally recession proof (that) led the recession. And so there's been a phasing down of demand for physical goods that has affected the manufacturing parts of the Iowa economy that I don't think are about the business cycle, so it could give a little bit of a misleading tie... as if that's a sign of recession. Tariff turmoil: Trump's tariffs to curb US economic growth while reducing deficit, says CBO report I think the challenge of Iowa, like much of the Midwest, is population growth has been modest at best and that contributes to lack of job creation, and if people are moving away, it can be harder for businesses to attract workers. And we did hear that from a bunch of folks that we talked to — that that was a major issue that we're having to deal with. It has been stated that a primary goal of the administration's tariffs is to restore manufacturing in the U.S. There has also been a lot of discussion of whether these are jobs that Americans still covet. Your thoughts? I don't know. I mean, in a way, you would want to talk to the manufacturing folks themselves. When they are paid well, which historically they have paid well. there is a lot of demand of people to move into manufacturing to get good pay, but that all that hinges on the pay. They can be tough jobs, for sure. That said, it felt like there was a mixture of caution on the part of the manufacturers that we talked to, caution that if this tariff thing goes sideways, it wouldn't help their domestic production, it might raise their costs, and they were nervous about kind of being thrown back into an environment like 2021-2022 when their costs (were) rising out of control. Some were even saying, well, if it was too big, it might be more like 2020, when there were shortages and they literally just couldn't make product cause they couldn't get chips or they couldn't get critical components. But that said, there were a number of people who expressed a view that if they could use this as a form of leverage or as a way to open up new markets, and you can kind of change the status quo, and that could take place in the next, you know, 30 to 75 days, that we might end up in a better spot than we were before... . And my view was we were in a decent spot, coming in (to the tariffs) at a national level, that is, pretty stable employment and pretty modest inflation rates. We finally got it down and it looked like it was heading to 2% (the inflation rate goal of the Federal Reserve). You recently discussed the fact that inflation for homebuying has far exceeded inflation in the rest of the economy blocking many young people from buying homes. Is there anything that can be done about that? There's nothing the Fed can do about that, (beyond) that we have stable inflation, and interest rates can come down and that translates into mortgage rates. There it could potentially stimulate construction. But the economist in me is basically like, you need supply, you need to build homes and there are regulatory obstacles, there are costs-of-production obstacles. And so I think that's much of what's going on... but I'm not positive. Do you see interest rates coming down in the near future? Before April 2 (when President Donald Trump announced tariffs, calling it 'Liberation Day") I was saying it looks to me like stable full employment with prices moderating and coming down to target. And therefore I believed over the next 12 to 18 months rates would likely come down a fair amount from where they were. And now it's been almost three months since I said that. I still feel like underneath there, nine to 12 months or so from now, rates could be lower, but it has thrown me for a little bit of a loop that we threw so much dust in the air from this uncertainty. We need to get some clarity that it's not going to be bad as the initial announcements made it seem. What are the most encouraging things you are seeing about the economy and what would be the elements that give you concern? The strongest thing in the economy in the last couple of years, number one, has been the job market. It's quite robust and wage growth has been solid. If you look at productivity growth, that is output per hour of work or output per worker, that's a series that economists tend to use as a rule of thumb, the most important driver of standard of living. The productivity growth rate tends to be pretty constant over long periods of time, and in the last couple of years there's been a notable increase in that productivity growth rate. ... We're still not totally sure if that a one off. Is it related to new technology? Is it because there's flexibility and people can work from home or they rematch to better jobs? ... But that rise in productivity is very exciting and I think is, at its heart, one of the reasons why wages have been able to grow faster than inflation by as much as they have. On the concerns side, I still have substantial concerns that if the tariffs morph into an escalating trade war where we put in big tariffs, and then there's big retaliation and then we put in more big tariffs, that it threatens to throw us backward to a 2021 type of environment or even a 2020-type environment where we're going to have supply disruptions and it raise(s) the cost of production and cuts off the output markets for our agriculture, for our manufacturing, and stuff like that. So that's why personally, I'm still in this wait-and-see posture. That may not be what happens and it's an area of concern in the agriculture space that affects Illinois and Iowa and Indiana pretty directly. They're in what I might call the margin squeeze (with) the cost of supplies, and chemicals, fertilizers, etcetera, rising still pretty significantly, but... they can't get higher prices for what they're selling. ... So it feels like farm incomes is going to still be in for a bit of a bumpy ride. It kind of was even before we got into the uncertainty about tariffs policy.
Free Malaysia Today
2 days ago
- Business
- Free Malaysia Today
US tariffs may hamper efforts to cool inflation, says Fed official
April data showed the PCE price index increased 2.1% year-on-year, narrowly exceeding the Federal Reserve's 2% inflation target. (Reuters pic) WASHINGTON : Shifts in US trade policy could hold back further progress in lowering inflation, a senior US central bank official said Tuesday, as President Donald Trump's sweeping tariffs ripple through the economy. The US economy is 'still on a firm footing, but uncertainty has notably increased since the beginning of the year,' Federal Reserve governor Lisa Cook told a Council on Foreign Relations event in New York. While the ultimate level of Trump's tariffs remains unknown as policy changes are ongoing, 'the effects are already noticeable,' she said. In particular, Cook warned of higher inflation and a jobs market cooldown. Price increases tied to policy shifts, in turn, 'may make it difficult to achieve further progress in the near term' when it comes to inflation, she added. Typically, the Fed holds interest rates at a higher level if inflation is elevated and when inflation is low, the central bank can cut rates to boost economic activity. For now, the Fed's preferred gauge of inflation – the personal consumption expenditures price index – rose 2.1% from a year ago in April. This was down from a month prior, but slightly above the central bank's longer-run 2% target. In a separate address in Iowa, Chicago Fed president Austan Goolsbee cautioned that encouraging inflation figures were 'old news,' saying they were the last reports before the effects of Trump's tariffs. 'Are the tariffs going to have a small impact?' he said. 'We gotta wait and see what happens.' Cook added that 'the economic environment could become highly challenging for monetary policymakers.' Besides changes to economic policy, the response of financial markets, businesses and consumers suggest risks to both price stability and unemployment, she noted. 'The recent post-pandemic experience with high inflation could make firms more willing to raise prices and consumers more likely to expect high inflation to persist,' she said.
Business Times
2 days ago
- Business
- Business Times
Oil climbs 2% to two-week high on geopolitical tensions
[NEW YORK] Oil prices climbed about 2 per cent on Tuesday to a two-week high as persistent geopolitical tensions between Russia and Ukraine, and the US and Iran looked set to keep sanctions on both Opec+ members Russia and Iran in place for longer. Brent crude futures rose US$1, or 1.5 per cent, to settle at US$65.63 a barrel, while US West Texas Intermediate (WTI) crude rose 89 cents, or 1.4 per cent, to close at US$63.41. 'Risk premium has ramped up this week as the prospect of a Russia/Ukraine ceasefire as well as an Iranian nuclear deal now appear to have been pushed back for weeks if not months,' analysts at energy advisory firm Ritterbusch and Associates said in a note. Russia said work on trying to reach a settlement to end the war in Ukraine was extraordinarily complex and that it would be wrong to expect any imminent decisions but that it was waiting for Ukrainian reaction to its proposals. Russia is a member of the Opec+ group that includes the Organization of the Petroleum Exporting Countries and allies, and was the world's second biggest producer of crude in 2024 behind only the US, according to US energy data. Opec member Iran, meanwhile, was set to reject a US nuclear deal proposal that would be key to easing sanctions on the major oil producer. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Iran was the third biggest producer of crude in Opec behind Saudi Arabia and Iraq in 2024, according to US energy data. In Canada, wildfires burning in Alberta have affected more than 344,000 barrels per day of oil sands production, or about 7 per cent of the country's overall crude output, according to Reuters calculations. Demand growth? In Europe, Euro zone inflation eased below the European Central Bank's (ECB) target last month on surprisingly benign services costs, underpinning expectations for further policy easing even as global trade tensions fuel longer-term price pressures. Central banks like the ECB use interest rates to keep inflation in check. Lower interest rates can spur economic growth and demand for oil by reducing consumer borrowing costs. But, in the US, Chicago Federal Reserve President Austan Goolsbee said higher inflation from US import tariffs could become evident quickly, but he said it would take longer to see a tariff-induced economic slowdown. The Organisation for Economic Co-operation and Development (OECD), however, revised down its forecast for global economic growth as the fallout from US President Donald Trump's trade war takes a bigger toll on the US economy. US job openings increased in April, but layoffs posted their biggest rise in nine months, suggesting that labor market conditions were softening amid a dimming economic outlook because of tariffs. The US has asked countries to make their best offers on trade negotiations by Wednesday as US officials ramp up efforts to deliver multiple agreements to Trump before a self-imposed deadline just five weeks away. Weekly US crude draw seen Analysts forecast energy firms pulled about 1.0 million barrels of crude from US stockpiles last week, reducing inventories for a second week in a row. That compares with an increase of 1.2 million barrels during the same week last year and an average decrease of 2.3 million barrels over the past five years (2020-2024). The American Petroleum Institute (API) trade group and the Energy Information Administration (EIA) release weekly US oil inventory data on Tuesdays and Wednesdays, respectively. REUTERS
Mint
2 days ago
- Business
- Mint
Oil climbs 2% to 2-week high on geopolitical tensions
NEW YORK (Reuters) - Oil prices climbed about 2% on Tuesday to a two-week high as persistent geopolitical tensions between Russia and Ukraine, and the U.S. and Iran looked set to keep sanctions on both OPEC members Russia and Iran in place for longer. Brent crude futures rose $1, or 1.5%, to settle at $65.63 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 89 cents, or 1.4%, to close at $63.41. "Risk premium has ramped up this week as the prospect of a Russia/Ukraine ceasefire as well as an Iranian nuclear deal now appear to have been pushed back for weeks if not months," analysts at energy advisory firm Ritterbusch and Associates said in a note. Russia said work on trying to reach a settlement to end the war in Ukraine was extraordinarily complex and that it would be wrong to expect any imminent decisions but that it was waiting for Ukrainian reaction to its proposals. Russia is a member of the OPEC group that includes the Organization of the Petroleum Exporting Countries and allies, and was the world's second biggest producer of crude in 2024 behind only the U.S., according to U.S. energy data. OPEC member Iran, meanwhile, was set to reject a U.S. nuclear deal proposal that would be key to easing sanctions on the major oil producer. Iran was the third biggest producer of crude in OPEC behind Saudi Arabia and Iraq in 2024, according to U.S. energy data. In Canada, wildfires burning in Alberta have affected more than 344,000 barrels per day of oil sands production, or about 7% of the country's overall crude output, according to Reuters calculations. In Europe, Euro zone inflation eased below the European Central Bank's (ECB) target last month on surprisingly benign services costs, underpinning expectations for further policy easing even as global trade tensions fuel longer-term price pressures. Central banks like the ECB use interest rates to keep inflation in check. Lower interest rates can spur economic growth and demand for oil by reducing consumer borrowing costs. But, in the U.S., Chicago Federal Reserve President Austan Goolsbee said higher inflation from U.S. import tariffs could become evident quickly, but he said it would take longer to see a tariff-induced economic slowdown. The Organisation for Economic Co-operation and Development (OECD), however, revised down its forecast for global economic growth as the fallout from U.S. President Donald Trump's trade war takes a bigger toll on the U.S. economy. U.S. job openings increased in April, but layoffs posted their biggest rise in nine months, suggesting that labor market conditions were softening amid a dimming economic outlook because of tariffs. The U.S. has asked countries to make their best offers on trade negotiations by Wednesday as U.S. officials ramp up efforts to deliver multiple agreements to Trump before a self-imposed deadline just five weeks away. WEEKLY US CRUDE DRAW SEEN Analysts forecast energy firms pulled about 1.0 million barrels of crude from U.S. stockpiles last week, reducing inventories for a second week in a row. That compares with an increase of 1.2 million barrels during the same week last year and an average decrease of 2.3 million barrels over the past five years (2020-2024). The American Petroleum Institute (API) trade group and the Energy Information Administration (EIA) release weekly U.S. oil inventory data on Tuesdays and Wednesdays, respectively. [EIA/S] [API/S] (Reporting by Scott DiSavino and Alex Lawler; Additional reporting by Michele Pek and Anjana Anil; Editing by Marguerita Choy and David Gregorio)
Bloomberg
2 days ago
- Business
- Bloomberg
Fed's Goolsbee: Need to Wait and See on Inflation Impact of Tariffs
Federal Reserve Bank of Chicago President Austan Goolsbee discussed inflation nearing the central bank's 2% target and the potential inflation impact of trade tariffs Tuesday at the Corridor Business Journal Mid-Year Economic Review in Cedar Rapids, Iowa. (Source: Bloomberg)
