The Indicator from Planet Money
What keeps a Fed president up at night
Apr 10, 2025
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, discusses the unpredictable economic climate, likening it to weather patterns. He dives into the intricate relationship between tariffs and inflation, shedding light on how trade wars can lead to unexpected price changes. The conversation also explores the hesitance in investment decisions within tariff-impacted industries and addresses inflation anxiety post-COVID-19. Goolsbee emphasizes the importance of resilience and the overall strength of the economy amidst challenges.
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Quick takeaways
- The unpredictable economic climate is impacting businesses, leading to cautious investment decisions due to fears of tariffs and inflation.
- The potential for stagflation exists, highlighting concerns about rising prices and altered consumer behaviors despite stable long-term economic indicators.
Deep dives
Economic Uncertainty and Tariff Impacts
The discussion highlights the unpredictable economic climate marked by escalating trade wars and significant variability in global stock markets. This uncertainty has been compounded by the fear of potential supply chain disruptions that can occur due to tariffs, which can have a long-lasting impact on inflation and economic stability. For instance, the podcast illustrates how a simple tariff can lead to unforeseen consequences, such as increased prices in one sector affecting multiple adjacent industries over time. Auto industry executives expressed concerns about making investment decisions in this environment, underscoring the detrimental effects of unpredictability on economic growth and business confidence.
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