Fed's Goolsbee, Hammack Warn Inflation Is Orange, Trending Red
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- Austan Goolsbee rated inflation 'at least orange' and said it has been 'going from orange to red lately,' citing tariffs that 'were supposed to go away, kind of didn't' and a new 'stagflationary shock' on top
- Beth Hammack also pegged inflation at 'the brighter, the more vibrant color orange,' noting it has run above the Fed's 2% target for five years and been 'basically moving sideways' for the past two
- The March jobs report, released two days after the interview was taped, showed the biggest monthly payrolls gain since Trump began his second term, with unemployment falling to 4.3% as large numbers of workers left the labor force
- Hammack rated the labor market outlook 'yellow to green — perhaps chartreuse,' saying 4.3% unemployment sits near her full-employment estimate, while Goolsbee gave the labor market a 'yellow,' pointing to a low-hiring, low-firing equilibrium driven by uncertainty
- Goolsbee said he is 'a little more anxious' about asset prices, citing 'a lot of frothiness' and uncertainty over whether it reflects productivity gains or a bubble waiting to pop
- Hammack assessed the financial system as 'generally green' from a stability standpoint, even with stock market losses since the start of the Iran war
Why it matters: The split between Goolsbee and Hammack is the story: Goolsbee flagged persistent tariff-driven inflation, a 'stagflationary shock,' and 'frothiness' in asset prices, while Hammack was more sanguine on both employment and financial stability. That divergence inside the FOMC matters now that a surprise-strong March payrolls report has just complicated the Fed's calculus on when — or whether — to cut rates again.
