A MARTÍNEZ, HOST:
For more on where the economy might be headed, we've called up one of the few economists who gets to help shape it. Austan Goolsbee is president of the Federal Reserve Bank of Chicago and one of the voting members of the Federal Open Market Committee. That's the group that determines interest rates. He also served as chief economics adviser to President Obama. Austan, first, how do you view the economy right now as you get ready to vote in a few weeks on interest rates?
AUSTAN GOOLSBEE: It's been an uneasy time because with the government shutdown, all the people working in the official statistics stopped working. And even with the shutdown over, there's still going to be a delay before we get some of this information. So it's a little hard to tell exactly where we are. That said, the economy's continued to grow. The biggest powerhouse of the economy has continued to be consumer spending. You've seen a lot of investment powered somewhat by the AI boom and a nagging inflation and affordability concerns that you see out here in the Chicago Fed District. Uneasy inflation and rising is on the minds of a lot of folks, too.
MARTÍNEZ: You mentioned, Austan, how information has been slow to trickle in because of the government shutdown. So when that happens, what do you rely on?
GOOLSBEE: Look, there are some data that still come out because they're done at the state level. So you get, say, new unemployment claims. We still get information on that. There are private sector sources. So I think on the labor market side, I see still pretty steady. Our problem is bigger when it comes to inflation because there aren't nearly as many private sector or other sources on inflation data besides the official government statistics. There are a few, but they're much more limited.
MARTÍNEZ: So on inflation, it remains stuck above 2%, and part of the Fed's mandate is to keep inflation under control. So is there something new the Fed should be trying?
GOOLSBEE: Well, we have made an explicit target. The nagging thorn has been we were progressing. Inflation was falling, falling, falling, and I thought was on its way to 2%. Now, for the last six months or so, inflation's been more like 3%. And the last readings we got right before the lights went out, there were some measures that it looked like it wasn't just above two. It was accelerating. So that's made me uneasy with too much front-loading of rate cutting, so I just want us to be careful.
MARTÍNEZ: Now, since taking office, President Trump has called into question economic data from the Bureau of Labor Statistics. Regional Feds also collect their own data. So what kind of data do you collect and why?
GOOLSBEE: We collect data in many different areas - financial data, real-side economic data. We collect some price data. The Chicago Fed's labor market indicators are readings that we get where we combine private sector information with the official government statistics. We want as much real-time information as possible. So the best statistics by far is the data that comes from the U.S. government. And, yes, they're noisier than they used to be because people don't like answering surveys anymore, and the response rates are down. So we're going to have bigger revisions than we did in the past. But it's still the case that the government data here in the United States are the best in the entire world.
MARTÍNEZ: And when you mean noisier, do you mean not as clear?
GOOLSBEE: Not as clear. Just there's a bigger margin of error.
MARTÍNEZ: So, Austan, today, as I'm looking around to see what's going on in the financial world, I see a bunch of different headlines - one from the Financial Times, "U.S. Tech Stocks Surge As Fed Rate Cut Bets Fuel Rebound." What do they know that they would be willing to make a bet on the interest rates being cut?
GOOLSBEE: Well, I think this is the market's business model, and it's important to remember the central bank is not on a day trader's timetable. I think too much attention can be paid to, well, what does the stock market think of what the Fed is doing? The Federal Reserve Act says, stabilize prices and maximize employment. And that's what we do. People at the FOMC meeting take the job extremely seriously. What drives interest rate decisions is the economic outlook and the data, and that's what it should be.
MARTÍNEZ: Austan Goolsbee is the president of the Federal Reserve Bank of Chicago. Austan, thanks for coming back on the show.
GOOLSBEE: Thank you for having me.
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