Marketplace - Inflation is moving the wrong way

Episode Date: June 22, 2026

The last time Austan Goolsbee voted in an FOMC meeting, he was one of two policymakers opposed to cutting interest rates. Six months later, he doesn’t regret that dissent. In this episode, Kai catches up with the Chicago Fed president to discuss the central bank’s communication style, persistent inflation concerns, and former Fed Chair Alan Greenspan’s legacy. Plus: Beef prices are likely to keep climbing this year, it could take months to rebuild depleted oil reserves, and economists make a case that AI could drive more inflation.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories from today’s episode:Chicago Fed President: Inflation is "well above the target and has been going the wrong way"As the oil crisis eases, the global scramble to replenish reserves beginsWhy beef prices keep climbingMany economists believe that AI will lead to more inflation. Why?How We Survive: A Carbon Burial at Sea

There's a lot going on right now. Mounting economic inequality, threats to democracy, environmental disaster, the sour stench of chaos in the air. I'm Brooke Gladstone, host of WNYC's On the Media. Want to understand the reasons and the meanings of the narratives that led us here and maybe how to head them off at the past? That's on the media's specialty. Take a listen wherever you get your podcasts. Tell you what, we've got just what you're. need on a Monday. Yep, a little macroeconomic analysis from American public media. This is Marketplace.

In Los Angeles, I'm Kyle Risdahl. It is Monday today, 22 June, good as it always is to have you along, everybody. There is a lot going on out there right now. Politics, of course, and always. Foreign affairs and national security definitely. But as we say around these parts, do not sleep on the economy, so we won't. Austin Goolsby is the president of the Federal Reserve Bank of Chicago. Awesome, welcome back to the program. Always good to have you on. Kai, thank you for having me back.

Let's start where we left off last time, which was October-ish of last year. Your general throughline was that inflation was your big concern, the labor market, maybe not so much. I guess I wonder if your thinking has changed at all. Hasn't changed that much. I ended up, as you know, dissenting at the last. meeting of the year on those same grounds that I wanted to get some more information to make me feel better about inflation before front loading too many rate cuts. I don't regret that dissent. I think we've continued to have a pretty stable labor market and we've continued to be dealing

with and it's not a surprise to anybody you look at the window of your car or go to the grocery store, we've been dealing with an inflation problem that's well above the target and has been going the wrong way. So let's talk about it going the wrong way, you know, to sort of paraphrase what happened at Chairman Warsh's press conference. You know, the number to the left of the decimal here is four. And I guess I wonder with inflation going the wrong way and economic growth going the other way, right?

GDP is at 1.6% in the first quarter. Um, uh, stagflation on your mind? You said it in an interview the other day. Stagflation, as you know, has been a stagflationary shocks as I call them. Yeah. Are the nightmare scenario, a nightmare scenario for any central bank, because there's not an obvious playbook of what you do. Now, the only thing that I will caveat with is this hasn't actually been a stagflationary shock. in the sense that the job market has been pretty stable. So what's been on my mind is what is the evidence that this is going to be temporary?

And then we're going to get back on path to 2%, which is what we've promised. And there are some signs, like the fact that some of the inflation came from tariffs, and that's supposed to be one and done, that we could get some resolution in the Middle East and maybe that inflation would go away. The fact that we've seen it in services, which historically is pretty persistent, is a little more disturbing. So where are you in the look-through school?

Do you subscribe or do you not subscribe to this idea that the Fed can look through what's going on? Well, some of both. You know, I guess I'd say some of both. I understand the argument in principle that you want to look through temporary shocks. and given that I wasn't there, so don't blame me, but given that the Fed dealt with that error in the very recent past where it thought, hey, these shocks are supposed to go away quickly and they did not, I do want us to at least, in terms of our credibility, let's acknowledge the possibility that these things are lasting longer than we wanted them. Well, I'm glad you mentioned the word credibility, because I do want to play a piece of tape from you from the chairman's press conference a week ago. And the understanding here, of course, is that you speak for yourself in the 7th district and not the board of governors. But it does seem germane. And I'm going to play the tape and then I'll come back.

Chairman Warsh, you've said repeatedly credibility is earned by delivering. If credibility requires delivering, the move would be to tighten or at least to threaten to. Now, you didn't do that today. Why not? that judgment you expressed was not expressed by any of the 19 people around the table. So I got to tell you, I was watching that press conference live, and when Chairman Warsh said that, I literally screamed at my TV. Really? Well, look, you know this is on four different layers. I can't answer your question. I'm not allowed, I'm allowed only to speak for me. I will say, in my view, the critical through line that we must determine. is in a situation in which the left of the decimal place number is a three or a four, how concerned are we that it's going to remain a three or a four versus this is not going to be

persistent and there are natural reasons why it would be coming down? That's a crucial factor to consider in my mind. and you know that that that's what I express and have been expressing for for some time so so speaking of you expressing things you know chairman Warsh has made a secret to the fact that that he doesn't how to put this to be fair to him he wants less communication from the central bank let's let's just put it that way and I guess my my my question to you is you are among the most prolific if not the most prolific members of of that group of people and I wonder how you feel about that well My understanding is his approach is let's have less speculation about rates,

less forward guidance about what the committee is going to do. And as you know, I'm pretty sympathetic to that approach. I think every time the committee makes statements about the future that end up not being true, our credibility takes at least a kick or a ding of some kind. And at the same time, I think one of the same time, I think one of the future, the strongest things about the Federal Reserve system is that it's not just a central government controlled entity. There are independent voices from all throughout the country. There's 12 reserve banks. Out here in Chicago, we're in the heart of the Midwest. We have the most manufacturing

of all the districts. It's extremely important that when I come to the FOMC meetings or when I'm out talking to you or anyone else, that we reflect that diversity that's in the economy, that if manufacturing is having particular issues, when I just got back a couple weeks ago from Rockford, Illinois, and them talking about the supply chain at a moment like this, that's crucial information that we get that shows up from the business leaders and small businesses before it ever shows up in the data. I don't think it's wise to not get that information out into the bloodstream. Last thing, and then I'll let you get back to your day job.

A word here about Chairman Greenspan. You must have known him and worked with him. Give me like 30 seconds on your thoughts on his passing. I did. I was friends with him, and my heart goes out to his wife and his family. A legendary figure in the Fed, for sure. In many people's mind, the iconic Fed chair. a lot has changed about the way the Fed does its business and about the economy since he was there.

But a lot remains timeless. And his processing through, how do you think through monetary policy when productivity growth rates are changing, when you have big expansions of the tech sector, how monetary policy responds when fiscal policy is going up or down, all of those are lessons that we should go study at moments like this. History matters. History matters. Austin Gouldsby, the 7th District of the Federal Reserve is where he's calling home. He's the CEO. The greatest of all districts. The greatest of all districts. Fair enough. Austin, thanks for your time. I appreciate it. Thank you, Kai. No offense to the other 12, obviously. Wall Street to start the week, live by the capital markets.

Suffered by M2, ticker symbol SPCX. Off another six. 16% today SpaceX just about right back to where it was when it went public. The rest of the tech sector suffered as well. We will have the details when we do the numbers. There is, as of this airing, some kind of deal with Iran. Specifics very much TBD. But what we can tangibly point to is that crude oil today is lower than it's been in months. U.S. crude below $75 a barrel.

Brent, North Sea crude below 79. But as Robin Brooks was telling us, Late last week, there is a long, long way to go before the global oil market gets back to normal. Marketplaces Elizabeth Trowal takes it from there. The world has been dealing with the largest oil market disruption in history. And still, things could be a lot worse. That's Tom Sang with Texas Christian University, who says the average gas price here was more manageable because of all the oil the U.S. and other countries had in storage. We did not get $5.

We didn't have any rationing. But now, the Strategic Petroleum Reserve, the oil, the U.S. government stores, is at its lowest level in more than 40 years. Commercial inventories have also been drawn down. Before the world can stop relying on its backup oil, Garrett Golding with the Dallas Fed says a lot needs to be dealt with, like rerouted ships and damaged infrastructure. Fields that need to be restarted throughout the Persian Gulf that have been shut in since the beginning of this, those will take, you know, in some cases. months to get back to full capacity. We're still, you know, likely dealing with, you know, an oil market that has to rely on inventory drawdown for the next several weeks, if not longer. Only after supply and demand rebalance can countries start to rebuild their reserves again.

Rice University Skip York says the U.S. should do it sooner than later. Because you never know when the next crisis is coming. He says the U.S. was worse prepared for Iran because it didn't aggressively stock. up on oil after the Russia invasion of Ukraine. The next crisis happened, and we were starting at a much lower level. Lots of countries could end up replenishing their reserves at the same time, Tom saying again. There will be a demand to fill reserves, which be in addition to the whole normal global demand picture.

Elevated global oil demand means that for consumers... I don't see pre-war oil prices for at least a year, if that. Consumers are likely to be paying more at the point. for a while. I'm Elizabeth Proval for Marketplace. There's a cost-benefit analysis. American meat eaters are going to have to do as summertime and grilling season really get going. Literal costs, I should say. The Federal Reserve Bank of St. Louis says the price of a pound of beef is up almost 13% over this time last year. It's more than doubled over the past 15 years.

And meanwhile, the Department of Agriculture is forecasting it's going to go up another 10% this year, I do not need to tell you, I believe, then the rate of inflation. Marketplace is Kelly Wells. Explains what's going on. High demand and low supply makes for a perfect storm, says Jamie Luke. She teaches agriculture, food, and resource economics at Michigan State University. On the supply side... Right now we have a historically low number of beef cows in the country.

The war in the Middle East has made fertilizer and fuel more expensive, which makes cattle feed more expensive. On top of that, weather forecasters are predicting an especially hot and dry year in parts of the U.S. with lots of cattle. Producers have had to make that difficult call to reduce the number of animals they have in their herd to be able to have enough forage to feed. And that's just the supply side. Personally, I think the bigger story in beef prices is the consumer demand side. Ryan Coffey teaches agricultural economics at Kansas State. Protein is kind of all the rage now. and specifically consumers have kind of gone back to red meat as a source of protein.

Now, normally, cattle farmers might increase their herd size to meet that consumer demand. But even in areas where there's likely to be plenty of rain, they aren't. And that suggests that cattle owners are not thinking that these prices will stay high and remain higher. William Masters is a professor of food policy and economics at Tufts University. He says it's more attractive to sell a cow at record high prices now than to hope her calves will be worth more later. It is entirely possible that people are expecting that corn and soybeans stay high, and that would lead them to not want to invest quite so much in feeder cattle. And even if cattle farmers do decide to make their herds bigger again,

it takes about two years before a calf is ready for slaughter. I'm Kaylee Wells for Marketplace. Coming up. We are testing out a robotic dog for inspection. Oh, what could possibly go wrong. First, though, sure, why not? Let's do the numbers. Dow Industrial's up 148 today. That's about three-tenths of 1% finished at 51,712, did the blue chips. The NASDAQ sank 351.1.1.1.1.6 at the close. The S&P 500 down 27 points, 4-tenths percent, 74 and 72 there.

Elizabeth Trowball was talking about oil inventories. Here are some drillers, Noble Corporation. That's a leading offshore. drilling contractor lifted 1.6%. TransOcean does the same in trades under the ticker symbol. Oh, I love this. R.I.G. Rig. Get it? Oil. Rig. RIG. RIG. Anyway, up one and nine-tenths of percent. Patterson UTI, which began as a drilling operation in West Texas up one and six-tenths percent. Kaylee Wells talking about beef and the rising price thereof. Some bovine-related stocks. Why don't we? Archer Daniels Midland, major processor of agricultural commodities, moved up one and six-tenths percent. JBS NVV, one of the world's biggest process. processors of beef down just under a tenth of one percent on the day.

Today marks the birthday of Richard Gurley Drew, the inventor of Scotch tape. Drew would have been 127 years old. 3M, the beneficiary of his invention, surged 1 and 6 tenths percent today. As I always do when I mention 3M in this phase of the program, Quick, what does it stand for? Anyone? Anyone? You're listening to Marketplace. This Marketplace podcast is supported by Inuit QuickBooks.

If you're trying to grow your business, Intuit QuickBooks workforce can help you lead your business with confidence, clarity, and in a way that makes sense for you. As a sponsor at Marketplace's My Economy, QuickBooks Workforce recognizes that no one person or business's finances are the same. As your needs evolve, QuickBooks Workforce evolves with you, bringing together the core HR capabilities businesses expect with the flexibility to adapt to your specific needs. QuickBooks Workforce combines human intelligence and AI-powered tools, so you get smart automation without ever losing control, spend less time reconciling and more time deciding

what to do next. Your processes get streamlined and you get precious time and energy back to move forward proactively. Move from reactive to proactive with brand new tools by making the switch to QuickBooks Workforce today. Your Marketplace is My Economy at Marketplace.org slash my economy and learn more about how QuickBooks can help your business grow at quickbooks.com slash workforce. That's quickbooks.com slash workforce. Hey everyone. I'm Rie Mae Reyes, host of the Marketplace podcast. This is uncomfortable. We all have that one financial task we're putting off. Maybe it's a bill you need a dispute, some paperwork you've got to submit, an account you've been neglecting. Personally, I've got a pretty long list.

You know, studies show that it's much easier to get things done if you do them alongside someone else. So on July 1st, that is what we're going to do. I'm hosting a virtual co-working event where we all show up with at least one financial task we've been avoiding and spend an hour finally dealing with it together. So please bring the thing you've been putting off. I'll bring mine, and we'll see you on July 1st. You can sign up for the virtual event at marketplace.org slash TIU. This is Marketplace. I'm Kai Risdahl.

Austin Goolsby and I talked about inflation a bit up at the top of the program. We're going to get an update later this week, Thursday, to be precise, the May report on the personal consumption expenditures price index. Relevant to that data is this. A survey out today from the National Association for Business Economics is in which more than 80% of respondents said they believe the buildout of artificial intelligence infrastructure to the tune of hundreds of billions of dollars is going to be, wait for it, inflationary. Marketplace's Stephanie Hughes has more.

To build data centers to power artificial intelligence, you need memory chips, copper, electrical equipment. Those things are also used in cars, toys, building out offices and apartment buildings. Elena Malaya, a senior economist for the audit and tax firm, KPMG, helped shape the questions for that NAB survey. She says there's a lot of competition for a finite amount of materials and with tech companies really willing to splash the cash for their data center needs. The other things kind of fall to the sidelines and they have to compete for higher prices, for the same kind of workers to build out these facilities. And so over time, prices do get pushed up. The AI infrastructure buildout is also contributing to higher electricity prices. George Washington professor Leah Brooks says data centers have been a shock to the system.

All of a sudden, you have a lot more demand for electricity, but not an immediate ability to increase the supply. Meanwhile, the stock market has been blowing up in the past couple of years, largely due to the performance of big tech firms that are investing in AI. An economist Alan Debtmeister with the bank UBS points out, This increases wealth. And people feeling more wealthy, spend more. And if you're spending more, that tends to lead to higher inflation. UBS estimates that AI adoption is pushing up the core PCE price index, that's inflation minus food and energy, by four-tenths of a percent.

And Debtmeister says it's a pretty big contributor to inflation overall. It's not as big as energy, certainly. And tariffs are a big driver of the inflation as well right now. But it is significant. Debtmeister says at 6. some point, AI adoption is expected to lead to higher productivity, which will push inflation down. But he says we are not there yet. I'm Stephanie Hughes from marketplace. The Trump administration doesn't really care for renewable and clean energy. It has canceled

literally hundreds of projects amounting to billions of dollars in the past year and a half. Not so the Europeans, who among many other things, are trying to build enough capacity to store 50 million tons of carbon dioxide every year by the end of this decade. Store as in suck it out of the air and put it someplace. How We Survive, our climate podcast, partnered with the German broadcaster DW and their podcast and radio program Living Planet on a visit to a new project in Norway, following CO2, pretty much from start to finish. Here's DW's Sam Baker.

The first stop on our carbon lifecycle tour is at the source. a cement factory in southern Norway, owned by the German company Heidelberg Materials. My name is Tor Gautestad. So I'm a CCS manager. CCS is carbon capture and storage. So we do the capturing part and the intermediate storage part. We're starting here because cement is used to make concrete. And these products are responsible for about 8% of global emissions, more than flying and shipping combined. Concrete is the most consumed material in the world, after water. And it's hard to decarbonize, because most of its emissions come from cracking open the carbon-rich limestone used to make it.

So by decomposing limestone, you are creating a lot of CO2 emissions. And that's where two-thirds of the total emissions are coming from. Heidelberg captures these emissions about 15 stories up, in what's called the absorber, the next stop on our tour. We need this height to have the proper retention time, you know, in the absorber. Here, a chemical grabs onto the carbon dioxide so it can be isolated and compressed into liquid CO2. It's then pumped to giant steel tanks where it waits for a ship to come pick it up. Which brings us to our last stop. The final resting place for this CO2.

On the other side of Norway, I visit the Northern Lights facility in Oigaten, a carbon. storage project owned by the fossil fuel companies, Equinor, Shell and Total Energy's. Most of its funding so far has come from the Norwegian government. Norway itself is quite wealthy, thanks to the country's majority stake in the state oil company, Equinor. The goal of this project is to inject massive amounts of CO2 under the North Sea, and turn a profit. Um, Axi Planner, the Operation Manus for Nordlights. Plainer is the guy in charge of making sure leaks don't happen, which can be deadly. And to do this? Oh, oh my gosh. That's a, that is a robot dog. You were not joking. No, we are testing out a robot dog for inspection. And he's now training how to walk and

he can actually climb steps and is remote operated and he can sniff CO2. He can sniff CO2. If a leak is detected, the plant shuts down automatically. 10 months after opening its doors, Northern Lights had received 10 shiploads of CO2, well below how much it could be storing if everything was operating at full capacity, according to Gautestad. There are quite a lot of hassle. And that's why, you know, nobody wants to be the first one.

And we have been through quite a lot of, you know, hiccups and small problems. And that was our first priority, really, to fix all the problems, not to maximize the caps. Some environmental groups like the Bologna Foundation support carbon capture and storage, but worry that fossil fuel companies are investing in projects like Northern Lights, so they can keep drilling for oil and gas. Jan Eustace-Ox works for the group and says he doesn't want CCS to distract from the switch to renewables. What you can see here is that renewables don't give the same profit margins as fossil fuels. So where does CCS fall into all this?

That's the difficult, difficult bit about it. At what point do we become complicit with this narrative of fossil lockdown? However, capturing and storing CO2 is seen as a crucial solution to bring emissions down, especially when it comes to those industries that are just so tricky to decarbonize, like cement. In Norway, I'm Sam Baker for Marketplace. Climate Solutions is how we survive. is all about. You can hear more from the new season, and you can hear more living planet, too, on your favorite podcast app. This final note on the way out today, your mileage may vary, but Bank

of America said in a research note this morning, it figures the Federal Reserve is going to raise interest rates by three quarters of a percentage point. Let me say that again, raise interest rates by three quarters of a percentage point this year, which a glance at the calendar will tell you is just about half over. Next meeting, by the by, end of July. Amir Bibawi, Caitlin Ash, John Gordon, Noia Carr, Steve Mullis, and Stephanie Seek are the Marketplace editing staff. Kelly Silvera is the news director. And I'm Kyle Rizdahl. We will see you tomorrow, everybody. This is APM.

Business and the ways we do it are changing in ways that are both more subtle and more radical than you realize. Welcome to compound interest from Salma 4 business. I'm Liz Hoffman. And I'm Rohan Giswami. We've been covering the forces behind this revolution. But now we want to talk directly to the people driving them. change. Each week, we'll talk to the operators, the experts, and the innovators to go beyond the headlines. We'll dig into everything from hospitality companies that no longer own hotels

to companies that will finance your sushi order. We'll unpack the transformation of how business and consumers engage with our economy and figure out what lies ahead. Listen to compound interest from Semaphore Business wherever you get your podcasts.