Federal Reserve Bank of Chicago President Austan Goolsbee is more concerned about too-high inflation than about any labor market weakness, though it is not clear if that worry translated into support for the interest-rate hike that a few of his colleagues wanted last month.
"The biggest problem facing our economy right now is not the collapse of industry and the collapse of jobs; it's that the prices have been rising too fast. We got an inflation problem and people hate inflation," Goolsbee said in a video published by Wired on Tuesday and recorded on June 22. Looking at indicators like the unemployment rate, the hiring rate and the layoff rate, he said, "They say labor market is stable, without being good, is how I characterize it."
The Fed on July 29 left the policy rate unchanged in the 3.50%-3.75% range, with three of the Fed's 12 voting policymakers dissenting in favor of a rate hike instead.
Goolsbee does not have a vote this year on policy, and he has not said if he supported the decision to hold rates steady in the face of inflation that has run above the Fed's 2% target for more than five years but that many policymakers still expect will resume falling later this year.
After the Bureau of Labor Statistics on Friday reported that the U.S. economy unexpectedly shed jobs in July, traders reduced previously heavy bets on Fed policy tightening, with interest-rate futures contracts traded at CME Group now pricing in about the same chance of another hold as a rate hike at the Fed's September meeting.
Economists expect data published on Wednesday to show consumer price inflation reaccelerated last month, after falling in June.
Fed Chairman Kevin Warsh, unlike his immediate predecessors at the U.S. central bank, has stayed away from giving any sense of where he thinks rates may need to head. Goolsbee has expressed similar skepticism about "forward guidance" on rates.
In the Tuesday video Goolsbee did not provide any specific views on the appropriate setting of monetary policy, but did answer a range of questions "from the Internet" about the Fed and the economy, including whether AI will destroy the job market and how to tell if a $100 bill is counterfeit.
"If AI takes some jobs, it will take the tasks in those jobs, but I'm still pretty hopeful and expecting that we're going to figure out how to keep people employed," Goolsbee said. The door to the Chicago Fed's vault weighs 80,000 pounds and inside are "many tens of billions" of dollars checked for wear and tear as well as authenticity, he said.
To detect a fake bill, he said, it's best to use your sense of touch and your eyes. "Please don't lick it," he said.
