Overview
- Austan Goolsbee said rising productivity does not guarantee lower inflation and could lift prices if people spend in anticipation of higher incomes.
- He told a Milken Institute audience that hype-fueled demand could overheat the economy and require interest-rate increases to cool it.
- Goolsbee warned that record stock prices tied to AI optimism may already support household spending, which can add to price pressure.
- Incoming chair Kevin Warsh has argued AI may expand supply more than demand and ease inflation, though he says the Fed cannot count on that outcome.
- Goolsbee pointed to the 1990s under Alan Greenspan, when the Fed ultimately raised rates even as a productivity surge was expected to continue.