WSJ's Take On the Week Chicago Fed President Austan Goolsbee On Tariffs, Inflation and AI
30 snips
Jul 19, 2025 
Austan Goolsbee, President of the Federal Reserve Bank of Chicago, dives into current economic dynamics and their intricate ties to tariffs and inflation. He sheds light on how these factors intertwine with market confidence and the dual mandate of the Fed. Goolsbee emphasizes the cautious optimism surrounding AI's potential for productivity, while warning about the risks of an exuberance bubble reminiscent of the dot-com era. He also unpacks the implications of housing market trends and Federal Reserve policies on broader economic stability.
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Midwest Economy as Business Cycle Indicator
- Chicago Fed's 7th District is a key economic indicator due to its heavy manufacturing and auto production.
- Tariffs initially sparked supply chain fears, but impacts were less severe in late spring and summer.
Tariff Impact Beyond Import Costs
- Import tariffs affect only 11% of U.S. GDP but can impact more if retaliations or tariffs on intermediate goods occur.
- Business and consumer reactions also amplify tariff impacts beyond direct import costs.
Mixed Signals on Inflation Trends
- Inflation acceleration in imported goods signals tariff effects, but progress in housing and services inflation is encouraging.
- Overall inflation trends may stay positive if price impacts of tariffs on goods are not overblown.