In today’s economic discussions, the tone is often clouded by uncertainty, yet at the 2025 SIEPR Economic Summit, Austan Goolsbee, President of the Federal Reserve Bank of Chicago, described productivity growth as both “strange and wonderful”. He highlighted that in the past two years, productivity in the U.S. has seen an upswing, surpassing the growth observed in the decade prior to the COVID-19 pandemic.
Goolsbee emphasized the importance of identifying the factors driving this surge, attributing much of it to artificial intelligence. He expressed optimism, suggesting the potential for continued productivity gains while also acknowledging concerns about rampant AI-related investments that could lead to economic overheating, complicating inflation control efforts. Goolsbee stated, “If that happens, it will make the fight against inflation harder.”
Despite these concerns, Goolsbee is hopeful about inflation trends, believing the Federal Reserve can steer inflation back towards its target of around 2% growth per year. He voiced confidence, claiming, “I think we slayed that dragon,” and noted that most Federal Open Market Committee members expect interest rates to lower in the long run.
Conversely, he cautioned that widespread tariffs could strain supply chains, presenting challenges for monetary policymakers regarding the nature of subsequent price increases. During a Q&A session, Goolsbee addressed criticism of the Fed’s response to the 2023 collapse of Silicon Valley Bank, attributing its failure to misguided predictions about interest rates. He also entertained the audience with humour, describing the work of an FOMC member as “about 85 percent NASA and about 15 percent DMV.”
At the 2025 SIEPR Economic Summit, Austan Goolsbee highlighted significant growth in U.S. productivity, largely driven by artificial intelligence. While optimistic about lowering inflation levels towards 2%, he warned that exuberance over AI investments could risk overheating the economy. Goolsbee also addressed criticisms of the Fed’s response to past banking crises, adding humour to his insights on interest rate setting.
In summary, Austan Goolsbee’s insights at the SIEPR Economic Summit reflect a blending of cautious optimism and concern regarding AI’s impact on productivity and investments. The potential for growth through AI is matched by worries over economic overheating and inflation management. Goolsbee’s perspectives underscore the balance required in navigating these pressures as the Federal Reserve works to stabilise the economy.
Original Source: siepr.stanford.edu
