A MARTÍNEZ, HOST:
April might have felt like a roller coaster ride for the U.S. economy. Tariffs were up and down. The stock market was volatile. The Labor Department's report on inflation yesterday, though, painted a cooler picture. Austan Goolsbee watches those numbers as president of the Federal Reserve Bank of Chicago. He's one of the people who gets to vote when the Federal Reserve sets interest rates. And in years past, he chaired President Obama's Council of Economic Advisers. Now, I asked him why April's numbers were better than expected.
AUSTAN GOOLSBEE: Some part of it is the official data, they only come out with a lag of a month or so. So we're still kind of holding our breath. And if consumers and businesses start freaking out a little bit about uncertainty and pull back on their spending or pull back on their investment, you can get some downturns. When there are moments of a lot of dust in the air, like what we saw a bit in April, you can go into some of this paralysis, but it still takes some time for that to show up in the numbers.
MARTÍNEZ: So how do you move then? How does the Fed kind of move, you know, when policies aren't settled and there's uncertainty still?
GOOLSBEE: You know, when people would ask me, are you a dove, are you a hawk, I'd say, I don't even know if I like birds. I just try to be a dog.
MARTÍNEZ: (Laughter) Yeah.
GOOLSBEE: There's a group of data dogs at the Fed, and the first rule of the data dogs is know the difference between the time for walking and the time for sniffing. And the time for sniffing is when you need more information. Now we've got a bunch of noise that we're trying to figure out the throughline. But if we can get past that, I feel like underneath there, that solid, hard data economy is still there.
MARTÍNEZ: So is it fair to say that if the American economy were a car, that even though the outside of the car may be looking a little scratched up, under the hood, the engine, everything looks OK?
GOOLSBEE: (Laughter) Maybe - I guess so. I mean, it's important to remember that the Fed, our job is to be the steady hand, not respond to the daily gyrations either of the stock market or of policy pronouncements. And we've continued to get these numbers that at least suggest that it's going OK.
MARTÍNEZ: Yeah.
GOOLSBEE: It's just, I think, not realistic to expect businesses or central banks to be jumping to conclusions about long-term things when you've got so much short-term variability. It's just a very difficult environment.
MARTÍNEZ: I wanted to ask about, Austan, is core Consumer Price Index. That excludes food and energy. Those two things tend to be a little bit more volatile, and they sometimes distort the overall picture of inflation. That was 2.8%, unchanged from March. So how much do you pay attention to that core Consumer Price Index, as opposed to just Consumer Price Index?
GOOLSBEE: Yeah, a lot. You know, and that can drive my mom crazy. You know, she'll say, what do you mean you're not looking at food and energy inflation? That's exactly what I'm looking at. Now you'll hear people saying things like super core. Is there a way you could carve out those pieces of inflation that are most affected by tariffs to tell us what would be happening to prices if the tariffs were not around? But we pay a lot of attention to core inflation.
MARTÍNEZ: What do you think the American people should kind glean from these numbers, from what we've seen with inflation? Is it something to be happy about, or do we still need to wait and see?
GOOLSBEE: A little bit of both. You never want to make too much of any one month or even two months' numbers. What I hear walking around and talking to folks is lack of consistency, that if they can't count on what's happening, then they just can't act yet. They just got to sit on their hands. But the official data only come out with a lag. That's why it's, at moments of transition, extra important to get out and listen to the people in real time, what they're seeing.
MARTÍNEZ: That's Austan Goolsbee, president of the Chicago Fed. Thanks a lot for your time.
GOOLSBEE: Hey, it's great talking to you again. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
