Austan Goolsbee speaks at Jackson Hole on August 8, 2023.
David A. Grogan | CNBC
Chicago Federal Reserve Chairperson Austin Goolsbee on Sunday warned against misrepresenting the impact of corporate inflation increase in price And tariffhas become the focus of Mr. Trump And Harris economic basis of the campaign.
Goolsbee has shied away from speaking directly about the presidential race because Fed’s Commitment to maintain his independence and political neutrality. But his comments come during an election cycle in which voter always ranked the economy and high cost of living as their top priorities.
As a result, Vice President Kamala Harris and former President Donald Trump All use cost reduction as the driving force for their economic proposals.
Harris has proposed a federal ban on “price gouging by companies in the food and grocery industry.” Biden Administration has repeatedly blamed companies for deliberately keeping prices artificially high even as their production costs have fallen.
While Goolsbee did not comment explicitly on the Harris campaign’s proposals, he said the high prices could not be explained solely by the company’s profit motive.
“The difference between prices and costs can vary a lot over the business cycle,” Goolsbee told CBS’s “Face the Nation.” “So I just want to caution people not to draw too many conclusions from any one observation about price increases.”
Goolsbee also clarified the inflationary impact of increased tariffs, one of the main pillars of Trump’s proposed economic plan.
“Tariffs increase prices,” he said. “A one-time increase in costs will increase prices but it is not a sustained inflationary thing.”
Trump has repeatedly promised to raise tariffs on all imports, including imposing higher tariffs on imports from China.
Economists cited that tough tariff proposal as a key reason why Trump’s proposed agenda could threaten to fuel inflation, but the Republican presidential candidate has flatly rejected that notion.
“A tariff is a tax on a foreign country. … It’s a tax on a country that is ripping us off and stealing our jobs, and it’s a tax that doesn’t affect our country,” Trump said at his campaign rally in Pennsylvania on Saturday.
Goolsbee said tariffs do not necessarily lead to long-term inflation, but by making production costs more expensive, they will increase consumer prices in the short run.
“Whether you want to call it inflation or not, they increase costs and increase prices,” he said.
Inflation has eased slightly in recent months since hitting a lofty high in the summer of 2022. Last Wednesday, the annual inflation rate in consumer price index reported its lowest level since March 2021.
But as Trump and Harris try to sell their economic pitches to inflation-weary voters, investors are turning their attention to the Fed. Many expect the central bank to cut interest rates in September, especially as recession fears mount.
The Fed is preparing for its annual meeting on Jackson Hole, Wyoming, Next week, the market will be looking for signs of a rate cut.
Goolsbee, who is not currently a voting member of the Federal Open Market Committee, stressed that the Fed is still weighing its decision on interest rates.
“Everything is always on the table — there is a possibility of a recession,” he said. “The latest GDP growth number was higher than expected, so that’s one of the bright spots, but you always have to worry about any contingencies. That’s the job of the central bank.”
