Austan Goolsbee

We had the run-up of goods inflation.

That, I think a lot of it is tied to tariffs, and we're still trying to sort out, is there more to come, or is that basically all there was with tariffs, and then it'll go away?

But there's also been a kind of a disturbing persistence of services inflation, which I don't think you can attribute to tariffs, because the tariff content of the services industry is not very high.

So...

We'll have to see what the PCE number says.

The Open Market Committee has said we watch PCE inflation.

That's in our framework review.

That's the best measure that we have of inflation, I think.

If it comes in hot, and it's just goods, I would be more comfortable saying that looks more like a tariff-driven thing, and that's the optimist's case, maybe, that it would prove transitory.

If it comes in hot, but it's heavily on healthcare, a bunch of service sector industries, that's a different kettle of fish, and that feels a little more persistent.

It might cause people to pull back.

The last five to eight years, however, there's been a breaking of the link between consumer sentiment and actual consumer spending.

for some reasons we understand and some reasons we don't understand.

So if you saw deterioration of consumer sentiment as say gas prices go up, which historically when gas prices go up, consumer sentiment goes down.

If that did not translate into a slowing of consumer spending, I would be much less nervous.

As I've highlighted, in 2025, the strongest thing that we have going for us was not AI data center investment.

Yeah, that was great, but the main thing driving growth was a strong, stable consumer, broad-based spending, which drove growth in the country.

And that still continues until it doesn't.

So if sentiment deteriorated, and there's a lot of concern as I'm going around the Midwest and the Chicago Fed District, a lot of expression of concern about affordability, about costs on both the business side and the consumer side.

If people begin to be nervous about their employment,