Federal Reserve Bank of Chicago President Austan Goolsbee commented late Tuesday on the diverging trends between hard and soft data in the U.S. economy, noting that while hard data remains strong, soft data is showing significant weakness. He expressed concern over the ongoing uncertainty, particularly in relation to inflation.
Key points from his remarks:
“Hard data on the U.S. economy is still pretty solid,” Goolsbee noted.
He emphasized that if the economy can navigate through the current period of uncertainty, its underlying strength will prevail.
However, he pointed out that soft data is deteriorating, with confidence levels “almost cratering.”
Goolsbee expressed concern over the impact of tariffs, describing them as a “supply shock,” and warned that an escalation of tariffs could lead to broader price increases, which could cause a shift in consumer behavior.
He noted that there is a strong reluctance to return to the inflationary environment seen in 2021 and 2022.
Goolsbee concluded that the current uncertainty is heavily influenced by fears of inflation.
Market Reaction: As of the latest update, the U.S. Dollar Index (DXY) was down 0.06%, trading at 104.16.
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