Chicago Fed president on the economy’s mixed signals

Amna Nawaz: Welcome to the "News Hour." Inflation is showing fresh signs of cooling, ticking up 2.7 percent year over year, nearly half-a-point lower than many economists had expected. The new data follows the release this week of a long-delayed jobs report that showed weak growth and the highest unemployment rate in four years. Geoff Bennett: Taken together, the numbers could bolster the case for more rate cuts in 2026, though, economists caution data collection for both reports was significantly affected by the government shutdown. Last week, the Federal Reserve cut interest rates for the third time in four months, citing downside risks in the employment market as its major concern. For a perspective on the economy, we're joined now by Austan Goolsbee, president and CEO of the Federal Reserve Bank of Chicago. Welcome back to the program. Austan Goolsbee, Former Chairman, Council of Economic Advisers: Thank you for having me. Geoff Bennett: So let's start with today's inflation report. What stands out to you in these numbers? Austan Goolsbee: Well, there's a lot to like in the report that we saw today. If you remember, because of the government shutdown, we just literally went dark on inflation data. And what we saw right before it went dark was a little bit disturbing. There were some categories of inflation that looked like they were going up or not coming down. This report today, what struck me overall is that the headline numbers were much below where they were expected, and that was pretty broad-based, and it wasn't just concentrated in one freak thing. Now, one-month data is no months, as I like to say, because there's a lot of variability, and that's especially true when you're kind of reaching down and pulling the bottle out. We got to brush the dust off of it. There are imputations and things. We would want to see this sustained, but there was encouraging news, the improvements that we saw in inflation today. Geoff Bennett: Encouraging news. For months now, the economy has been sending these mixed signals, inflation easing, but the labor market showing real signs of weakness. When you step back and look big picture, what concerns you the most right now? Austan Goolsbee: Well, what concerns me the most is if we were to get more readings like the ones we were getting before the data turned off, where both sides of the so-called dual mandate for the Fed, which the law says, when we set monetary policy, we're trying to maximize employment and stabilize the prices. If both sides are getting worse at the same time, that's a very uncomfortable position for the Central Bank to be in. And that's where we were, progress on inflation stalled out, but the job market weakening slowly, showing some stability, but weakening pretty steadily. If we return to a circumstance like that, that'd be the biggest concern. The more we get readings like the price readings that we got today on inflation, the...

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