Latest news with #Goolsbee
Yahoo
6 days ago
- Business
- Yahoo
Chicago Fed president says ‘six-pack' economy hiding under layer of uncertainty
Federal Reserve Bank of Chicago President Austan Goolsbee speaks during the third day of the Mackinac Policy Conference at the Grand Hotel on Mackinac Island, Mich., on May 29, 2025. (Photo by Andrew Roth/Michigan Advance) MACKINAC ISLAND – The president of the Federal Reserve Bank of Chicago says that while the United States may be heading towards stagflation, there is still a strong economy hidden underneath a layer of uncertainty. Austan Goolsbee, speaking at last week's Mackinac Policy Conference, pointed to low unemployment rates and inflation hitting targets to suggest that rates should be 'well below where they are today' within the next few years. But he said that's at risk due to the uncertainty caused by constantly shifting federal economic policies, like President Donald Trump's will-he-won't-he approach to tariffs – which he said Michigan is the most exposed state to in the country. 'If we can get the dust out of the air, I do still think that underneath there is a strong dual mandate economy,' Goolsbee said, referring to the Fed's responsibilities to stabilize prices and maximize employment. 'The longer we go contemplating really big changes, like some of the ones that have been discussed, the more that fades into the background.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX Goolsbee compared it to when he started going to the gym and asked his trainer how long it would take for him to develop a six-pack. 'Everyone has a six-pack underneath. The problem is not the lifting of weights; it's you've got to get all of what's on top of there off before you can see it,' Goolsbee said. 'And I feel a bit like that on the economy, you know, if we can just get this off of there, there's a six pack.' While Goolsbee said that the economy is currently heading in the direction of stagflation – with inflation rising at the same time employment is deteriorating – he said it will likely not be anywhere near as dramatic as the stagflation of the 1970s, when inflation was at 13% with an 8% unemployment rate. But he said any decision the Fed has to make can have a large impact on people's lives. 'What the Fed decides affects regular people. It is not just a game to be played out in the stock market,' Goolsbee said. 'It affects construction, it affects purchasing cars, it affects whether you can buy a house.' Ultimately, he said that while it would be easier to make those decisions with more stability, he said the Fed will adapt to whatever conditions they are presented with. 'I always say that our model at the Fed is the same as the Midwest, that there's no bad weather, only bad clothing,' Goolsbee said. 'You tell me what the conditions are, and I'll tell you what jackets you're supposed to wear.'
Straits Times
29-05-2025
- Business
- Straits Times
US Fed's Goolsbee: If tariffs are avoided, policy rate can come down
Mr Austan Goolsbee says the US labour market was stable and inflation was heading towards the Fed's 2 per cent goal before tariffs were introduced on April 2. PHOTO: REUTERS US Fed's Goolsbee: If tariffs are avoided, policy rate can come down NEW YORK - Chicago Federal Reserve Bank president Austan Goolsbee on May 29 said he believes that if big tariffs could be avoided, either through trade deals or otherwise, the US central bank could likely cut interest rates given the underlying strength of the economy and the direction of inflation. Comparing the economic effect of tariffs to a layer of fat atop an otherwise healthy set of abdominal muscles, 'you've got to get all of what's on top of there off before you can see it,' Mr Goolsbee said, at the 2025 Mackinac Policy Conference. 'And I feel a little bit like that on the economy. You know, if we could just get this off of there, there's a six-pack underneath.' Mr Goolsbee did not comment directly on a May 28 ruling by a US trade court that blocked many of the tariffs put on by the Trump administration that have threatened to push up inflation and slow economic growth, including the 'Liberation Day' levies from April 2. Before that date, Mr Goolsbee said, the labour market was stable and inflation was heading towards the Fed's 2 per cent goal, conditions that would allow the Fed to bring the policy rate down from its current 4.25 per cent to 4.5 per cent range and towards its long-term settling point. Based on the most recent Fed policymaker projection, that long-term neutral rate is around 3 per cent. For now, though, uncertainty over tariffs is causing businesses to have a 'pencils down' moment as they wait for clarity on trade policy, Mr Goolsbee said. The Fed finds itself in a similar situation, with policymakers particularly worried about the possibility of tariffs disrupting downward progress on inflation and pushing up the unemployment rate. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Yahoo
29-05-2025
- Business
- Yahoo
Fed's Goolsbee: if tariffs are avoided, policy rate can come down
(Reuters) -Chicago Federal Reserve Bank President Austan Goolsbee on Thursday said he believes that if big tariffs could be avoided, either through trade deals or otherwise, the central bank could likely cut interest rates, given the underlying strength of the economy and the direction of inflation. Goolsbee did not comment directly on a ruling Wednesday by a US trade court that blocked many of the tariffs put on by the Trump administration, including the aggressive "Liberation Day" levies from April 2. Before that date, Goolsbee said, the labor market was stable and inflation was heading towards the Fed's 2% goal, conditions that would allow the Fed to bring the policy rate down to its long-term settling point, well below the current 4.25%-4.5% rate. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-05-2025
- Business
- Yahoo
Fed's Goolsbee: if tariffs are avoided, policy rate can come down
(Reuters) -Chicago Federal Reserve Bank President Austan Goolsbee on Thursday said he believes that if big tariffs could be avoided, either through trade deals or otherwise, the central bank could likely cut interest rates, given the underlying strength of the economy and the direction of inflation. Goolsbee did not comment directly on a ruling Wednesday by a US trade court that blocked many of the tariffs put on by the Trump administration, including the aggressive "Liberation Day" levies from April 2. Before that date, Goolsbee said, the labor market was stable and inflation was heading towards the Fed's 2% goal, conditions that would allow the Fed to bring the policy rate down to its long-term settling point, well below the current 4.25%-4.5% rate.
Miami Herald
26-05-2025
- Business
- Miami Herald
Fed official sends strong message about interest-rate cuts
President Donald Trump's latest whipsaw tariff threats - including a 50% hike on European Union goods and demands that Apple and Samsung manufacture phones in the United States – have not only complicated global trade but are likely to delay interest rate cuts. That's according to Chicago Federal Reserve President Austan Goolsbee, who said May 23 that Trump's latest tariff threats have complicated policy and likely put off changes to interest rates. This Memorial Day, get $100 off TheStreet Pro - our best deal of the summer won't last long! Your portfolio will thank you Trump's repeated demands underscore the volatility of U.S. trade policy and provide another flash point for global worries about fiscal policy, which have sent bond yields sharply higher. Since April 2, or "Liberation Day," tariff threats and trade jitters have spooked buyers and sellers into a seemingly endless roller-coaster ride. Many market, economic, and financial experts have begun publicly warning of a recession within a few months, while others predict a nation stuck in a nasty stagflation. Bloomberg/Getty Images Central bankers are generally careful not to wade into issues of fiscal and trade policy, but are left to analyze their repercussions. Related: Hedge-fund manager sees U.S. becoming Greece The proposed EU tariffs would begin on June 1. In a CNBC interview, Goolsbee said the Fed's movements likely will be on hold as it evaluates the ever-changing trade policy and how it affects inflation and employment. Goolsbee spoke the same day Trump jolted markets again with a call for 50% tariffs on products from the European Union starting June 1, while indicating Apple will have to pay a 25% tariff on iPhones not made stateside. Apple mostly makes its smartphones in China, though some are produced in India as well. While the impact of a costlier iPhone likely wouldn't mean much from a larger economic perspective, worries about the stability of fiscal policy have sent bond yields sharply higher. Goolsbee said on "Squawk Box" when asked about Trump's new actions. "Over the longer run, if they're putting in place tariffs that have a stagflationary impact…then that's the central bank's worst situation." Related: Jim Cramer sends blunt message after Trump's latest tariff surprise "So I think we'll have to see how big the impacts on prices are," he added. "I know people hate inflation." The Fed's benchmark overnight borrowing rate is targeted between 4.25% and 4.50%, where it has been since December. The actual rate most recently traded at 4.33%. Goolsbee is still optimistic that the longer-run trajectory is toward solid economic growth despite Trump's April 2 tariff announcement that rattled markets. "I'm still…hopeful that 10 to 16 months from now, rates could be a fair bit below where they are today," he said. Goolsbee is a voting member this year on the rate-setting Federal Open Market Committee, which next meets June 17-18. At the meeting, officials will update their economic and interest rate projections. The committee indicated two rate cuts this year in its last update in March. Markets expect the Fed will cut twice this year, with the next move not happening until September. Goolsbee did not commit to a course of action from here amid the uncertainty. Related: Veteran fund manager sends hard-nosed message on Fed interest rate policy The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
