A major figure in the Federal Reserve expressed concern about the continuing effects of high inflation on the American economy. Chicago Fed President Austan Goolsbee told Fox News this week that “inflation’s above where we want it to be.”
The former Obama administration official was asked whether Friday’s job report affected the pace of recent Fed interest rate hikes.
The higher-than-expected job growth signaled the potential continuation of high inflation. Goolsbee said that inflation “hasn’t come down as fast as we wanted.”
US job growth accelerated in April. Employers added roughly a quarter of a million jobs last month, pointing to sustained labor market strength that could lead the Federal Reserve to keep interest rates higher for longer as it fights to lower inflation https://t.co/roQuILRT5k pic.twitter.com/8CXj16uxfb
— Reuters (@Reuters) May 6, 2023
He also said that the Fed has to “watch a lot of indicators, not just the unemployment.”
He added that the “credit conditions like the ones we’re seeing now, in the past, have been correlated with recessions.”
A further increase in interest rates could spark recessionary pressures, such as those seen recently on banks. After several months of struggles, First Republic Bank was seized by the FDIC and sold to JP Morgan Chase.
Furthermore, if the Federal Reserve does not increase rates, one likely outcome could be a further increase in inflation.
Goolsbee was a major figure within the Obama administration, where he courted controversy. President Barack Obama appointed him as head of the White House Council of Economic Advisers.
The economist claimed that the Affordable Care Act, otherwise known as ObamaCare, would not raise tax rates on those earning less than $250,000 per year.
This was not the case.
In 2011, Goolsbee testified before the House Ways and Means Committee in January 2011 that the ObamaCare individual mandate was “not a tax increase of a normal form.”
He was also questioned about restrictions on health savings accounts to purchase over-the-counter products as well as a reduction on tax credits, which acted as an effective tax increase for many families.
When asked about the ObamaCare tax on tanning, Goolsbee simply shrugged.
The conservative organization Americans for Tax Reform described Goolsbee’s testimony as an example of “a violation of President Obama’s central campaign promise” not to raise taxes on working families.