Pod Insights Masters in Business At the Money: Chicago Fed President Austan Goolsbee on Tariffs, Supply Chains and Inflation About this episode Tariffs are in effect raising fears of sparking a new round of inflation and hurting economic activity. Will they reduce the likelihood of the Fed cutting rates any time soon?
On this special episode, Barry Ritholtz speaks with Austan Goolsbee, President of the Chicago Federal Reserve. Goolsbee, a voting member of the FOMC, breaks down the impact of tariffs, the drivers of inflation, and what the FOMC is watching.
Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work.
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0:31 Speaker 01 This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting
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2:14 Barry Ritholtz? Tariffs, egg prices, commodities, geopolitics, war, all of these things affect inflation. I'm Barry Ritholtz, and we're going to bring you an extra special enlarged edition of At the Money, where we're going to discuss how investors should think about inflation. To help us unpack all of this and what it means for your portfolio, let's bring in Austin Goolsbee. He's president of the Federal Reserve Bank of Chicago. He is a voting member of the OFOMC. Previously, he was chairman of the Council of Economic Advisers and was in President Barack Obama's cabinet. So let's just start out with a simple question.
2:58 Barry Ritholtz? You've talked about the golden path between inflation and recession. What lesson should the Federal Reserve take from our recent and rather successful bout with disinflation?
3:14 Speaker 03 Yeah, Barry, thanks for having me on. Look, I called the golden path. You remember, as I came into the Fed, I started at the very beginning of 2023. In December of 2022, it was the Bloomberg economists who said there was a 100% chance of recession in 2023 because the historical record suggested that to get rid of inflation, you had to have a big nasty recession. That's what had happened at all times. And what I called the golden path was in '23, we had as almost as large a drop in inflation that we have ever had in a single year.
3:59 Speaker 03 And not only was there not a recession, the unemployment rate never even got above 4%, a level that a lot of folks thought is below full employment. So that was a golden path year. And I think one of the principal lessons, there were a couple of principal lessons that explain how it was possible. One was the supply side was healing on the supply chain. And there was a big surge of labor force participation from a number of groups. I think a lot of it tied to the workforce flexibility.
4:41 Speaker 03 But if you saw, if you looked at self-described disabled workers, highest labor force participation ever. So you got a number of positive supply shocks that are exactly what allowed for the immaculate disinflation, which the people who thought that was impossible, use that phrase mockingly. But that is exactly what happened. And now fast forward to today. Um, so in a way, transitory became Steve Leesman's phrase, transitory. But it was all because the supply side, when you get negative supply shocks, they do heal.
5:25 Speaker 03 But one of the lessons of COVID was that might take longer than you thought ahead of time. Because the supply chain is complicated, the modern supply chain. And you know that the, the Chicago Fed is the seventh district. And we're like the Saudi Arabia of, of auto production, uh, in the seventh district. We got Indiana, Illinois, Michigan, Wisconsin. If you go talk to the auto suppliers, that's like the mother of all supply chains. Okay. So a single car has up to 30,000 different parts and components in it.
6:08 Speaker 03 And every single one of them has its own supply chain. And you've probably seen some of these people that will track one individual part through the U.S. supply chain and the way that it cut, you know, the transistor came from Asia. Then they sent it to Mexico, they put it into a capacitor, they put the capacitor in a seat, gets sent to the seat manufacturer in Michigan, it goes to Canada, comes back to the U.S., finally gets put in a car and you go buy it on the lot and drive it out. In an environment like that, the spillovers can take a long time. That's what we saw in COVID. Then you couldn't get computer chips, so you couldn't make the electronic seat.
6:52 Speaker 03 So they couldn't make the cars. So the price of cars went up. Then that meant the rental car companies couldn't get new cars. So the price of rental cars went up. Then the, the whatever, the
7:04 Barry Ritholtz? Used cars.
7:05 Speaker 03 Salesmen who use the rental car. And so that thing played out over years, not weeks. My fear now is that if you're going to do something negative on the supply side, and make no doubt about it, tariffs on intermediate goods like steel, like parts and components, like the things that are getting sent from auto factories, from suppliers in Canada that are getting sent over the border to be fabricated in into the car in Michigan, that's a negative supply shock. And I hope that it's small enough or short-lived enough that it doesn't reteach us the lessons of COVID.
7:49 Speaker 03 But, but it might, the, the lesson of COVID was that can have, if it's big enough, that can have a longer lasting impact than, than you might have thought at the beginning.
8:01 Barry Ritholtz? So let me ask you a question about that recession that never showed up. Forget 100% chance of recession, 22, 23, 24. Half of the Wall Street economists were forecasting recessions. And no less an August and, and well-regarded economist than Lawrence Summers was saying, hey, you'll need 10% unemployment to bring this inflation down. What was it about the historical models that seems to have gotten this economic cycle so wrong?
8:37 Speaker 03 Well, tha- that's the critical question. And Summers said it either had to go to 10% or if it went to 6%, it would take five years of unemployment above 6%. I think the thing that it got wrong, that worldview got wrong, is that it was rooted in almost all previous business cycles were regular, demand-driven business cycles. And that's the logic. In a demand-driven business cycle, you over-stimulate, inflation goes up, inflation expectations go up, and you have a hell of a time getting it out of there.
9:19 Speaker 03 As you know, I was an old dear friend with Paul Volcker, and he was a mentor of mine and a personal hero, really. And one of the lessons of the Volcker episode, which was a time when inflation expectations went way up, is that it's extremely painful. If the Fed or the central bank does not have credibility, it's extremely painful to get rid of inflation. In an environment where the Fed is credible, so that even as headline CPI inflation was approaching double digits, the Fed was announcing, "We will get inflation back to 2%."
10:03 Speaker 03 And if you go look at the market estimation from TIPS or from others, people believed it. If you looked at the, "What do you think inflation will be in five years?" They were saying it will be back to 2%. That is a sign of credibility of the central bank. So, A, you must have credibility, and B, you must have the good fortune that's positive supply shocks. In our case, one, a big increase in labor force participation tha- tha- that was enabled, I think, by some of the more flexible work arrangements. Two, that we had had such a horrible
10:45 Speaker 03 supply chain experience coming through COVID with shortages, et cetera. That could heal. And then, three, a pretty substantial uptick in the rate of productivity growth. That combination was a lovely combination that allowed inflation to come down without a recession. And I think that the- The chat GPT AI version of a central bank would have got it wrong because it would have been based on a training sample that was a whole bunch of demand shocks and this really wasn't a demand shock induced business cycle. And you don't look, it doesn't take somebody with the market acumen that you have, Barry, and it certainly doesn't take a PhD to look out
11:29 Speaker 03 and recognize that the COVID business cycle was driven by industries that are not normally cyclical. Normally cyclicals like consumer durables or business investment are the thing that drives the recession. And here, the demand for consumer durables went up because people could not spend money on services. This is the only recession we ever had that came from people not being able to go to the dentist. And the thing about that, the dentist is normally recession proof. And so that's why we, everybody should have been more humble
12:09 Speaker 03 in pronouncing what the future would be coming out of such a weirdo business cycle. And we're still kind of living with that.
12:18 Barry Ritholtz? So, so let's talk about humility. You have specifically mentioned that the Fed needs to be, quote, more careful and more prudent about rate cuts due to the risk of inflation kicking back up again. So what specific inflation indicators are you watching closely in 2025?
12:40 Speaker 03 Okay, I'm thankful, Barry. I thought you were gonna be like, let's talk about humility. You once said, and I thought you were gonna be like, you're not, you're not a humble person. Look, my, I have actually been, before we got to this dust in the air period, where everybody's talking about major, either geopolitical changes to conditions or changes of policy conditions that might affect inflation, I've been more confident. I, I've had comfort. We're still on the path to get inflation to 2% and we could cut rates. Now, I'm open to being proven wrong.
13:25 Speaker 03 And if I adjust the, I'm in the data dog caucus. If, if the data come in and the outlook is changing, for sure, I would change my view. But the, I, I think it's critical to answer your question specifically. Well, what should we look at inflation? I think number one, you want to look at the through line on inflation. Not get overly indexed on monthly gyrations. It's a very noisy series. Okay, so looking over a longer period and what matters is the new months coming in.
14:07 Speaker 03 The, the inflation that's a 12-month backward looking average, which is usually what we're reporting it. 11 of the 12 months that are included in that are not new information. We already knew that. We knew, for example, that the blip up in inflation last January, more than a year ago, was going to fall out the back. And so that it would be very likely that the 12-month average would start dropping here in the first quarter. But that would not be a sign that the inflation is falling right now. The inflation already fell. It is just like how, how we do the average.
14:48 Speaker 03 So, number one, I put a lot of weight on the new months coming in and trying to get the through line of that. Not just react to, to one month. And second thing that, that helps me, that I, that I find helpful is looking at the components of core inflation. Now, I know it can drive people nuts, like it can drive my mom nuts, that we put our focus on core inflation and not food and energy inflation. Because my mom is like, what do you mean? You're not paying attention to food and energy inflation. That's very public, top of mind for her.
15:31 Speaker 03 It's because those are so variable, they're up, they're down. The, we think the better observation is to look at core. And then within core, there's goods, there's services, there's housing. Our problem has been. Goods inflation had returned to deflation and was looking good. Housing inflation's been the biggest puzzle and services inflation pretty persistent. The things that have given me a little more confidence lately is that even as we had a bit of a blip up in the inflation here, the components still look pretty good.
16:10 Speaker 03 The housing inflation has finally started falling on a pretty persistent basis as we've been wanting it to. Services getting closer, much closer to what it was pre-COVID. Housing back close to what it was pre-COVID. And the thing that has been firmed up here in the last couple of months has actually been goods. And the thing about goods inflation is, as you know, and, and as some of my research showed before I ever got to the Fed, goods inflation over long periods is actually deflation. The, the, the 2% inflation that we were at before COVID
16:52 Speaker 03 was housing three and a half to four per year. Services, two and a half per year and goods minus a half to minus one per year. And so I think it's overwhelmingly likely that goods will go back to that very longstanding trend. And as it does so, that's the, those are the kinds of things that give me confidence.
17:15 Barry Ritholtz? So you mentioned housing. We seem to have two ongoing issues with housing. The first is it appears that since the financial crisis, we've significantly underbuilt single-family homes.
17:28 Speaker 03 Underbuilt, yeah, I agree with that.
17:30 Barry Ritholtz? As the population can.
17:31 Speaker 03 And, and multifamily.
17:33 Barry Ritholtz? So you have the population growing, you still have fairly decent immigration numbers. Too much demand, not enough supply. The first question is, what can we do to generate more supply in housing? Do higher rates operate as a headwind against builders, contractors, developers putting up more housing?
17:57 Speaker 03 Look, this is a tangled, this is a tangled web
18:04 Speaker 03 that is critically important to the economy. You've seen the relative price of housing go way up post-COVID. But the one thing that I want to highlight is, yes, it's very noticeable, but it's not new. If you look, like I said, for the whole decade plus pre-COVID, you had house prices going up three and a half percent a year, goods prices going down 1% a year. If you just compare housing relative price versus going to Costco relative price, a thing that compounds 5% a year for 15 or 20 years, Yeah.
18:48 Speaker 03 that's gonna be a really big difference at the end of that time. And so I think one component that people are seeing, and they're not wrong. You see the frustration of young people, they say, you know, when my, when my dad was, was 25 years old, he on one job could, could afford a decent house and I can't buy a condo. And they're not wrong, the relative price of housing's gone way up. I think some component of that is regulatory in nature and business permits. And I've been convinced by, by a bunch of the evidence that land use regulation have made it very difficult for us to build housing of any form, single-family homes, multifamily homes.
19:33 Speaker 03 I have a, I did some research that was about the construction industry. And another thing going on is that overall productivity in the construction industry is not only been stagnant, it's actually over long periods of time been negative. That we, we've gotten worse at building the same things that, that we did 20, 30 years ago. So I think that's, that's part of it. And I think you're highlighting that rates.
20:05 Speaker 03 Do have a twin, they do have a twin, twinned effect. One is they affect demand, but the other is they do affect construction.
20:17 Speaker 03 And so I think in a higher rate environment, if you're trying to cool the economy, this is always true, but the shift of more and more of our mortgages to being thirty year fixed than they were, say, in two thousand and seven have meant that changing rates can have more of a lock-in effect than, and it kind of dull the immediate impact of monetary policy than it does in a more immediate mortgage impact environment.
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21:20 Speaker 01 This is the Bloomberg Tech Minute brought to you by Chat G P T. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting
22:02 Speaker 01 and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind work. Why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote must be willing to work extended hours and weekends as needed. One major perk for all that hard work employees access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.
22:43 Barry Ritholtz? Let's walk out a little bit about housing.
22:46 Speaker 03 Yeah.
22:47 Barry Ritholtz? Owners equivalent rent has been this bugaboo for a long time that some people following the financial crisis said had understated housing inflation. Now there's some people saying something similar. How do we, and I know the Fed has looked at this. There've been a number of white papers that have come out of the Fed. How should we think about the equivalent of renting versus ownership in terms of the impact on inflation?
23:16 Speaker 03 You raise several critical points if we're going to walk out on housing and inflation. Point one, it's not single family home sales prices. It's owner equivalent rent plus rents. And the reason it's that is because part of buying a house is a financial asset. So if you're buying a house and the value is going up and you're selling it for more and if there's speculation, that's not really housing. What you're trying to get, that's not really inflation. What you're trying to get for housing inflation is something like the CPI. How much more does it cost for the same housing services?
24:02 Speaker 03 And that's why they try to compute owner equivalent rent and similar. Point two, that's, there's a heavy lag in the way they do it. So. In a way, the critics were correct that it was understating inflation on the way up. And the other critics are right that now it's overstating inflation on the way down. For the same reason that it's kind of like if you were measuring average rent. And people were raising, it was a time when the market was raising the rent.
24:41 Speaker 03 It's gonna take time before that shows up in average rents because the contracts last for a year. Twelve, twenty-four months, yeah. So you get this automatic lag in there. I think that has been a major component of measured housing inflation. Because if you go look at market-based measures, like from Zillow or others. They were showing rapid drops in the inflation rate. Back to, or in some cases even below what inflation was before COVID started. And so that's been the puzzle that's been our impatience. Why hasn't it shown up yet?
25:24 Speaker 03 That's been true for quite a while and the lag theory, it should start showing up. Well, finally it has. And that's why I have a little more confidence that the housing inflation improvement will be lasting. Is it was, it took a long time to run up. And now it's finally started coming down. So I think it's, it's probably got legs of coming down. So I, I think those are two key components on, on the housing inflation side. We could get, we could even go into a third layer of wonky, but it's more subtle.
26:03 Speaker 03 Which is the component, i- if you think about rents and say market rents in Zillow. Or who are renters versus who are new home buyers? They're sort of different markets. And so it doesn't have to be that the inflation. of the Zillow market rents matches the owner equivalent rents that they're measuring at the BLS because they might be different new renters and and existing tenants might be a little bit too separate markets.
26:41 Barry Ritholtz? Makes a lot of sense. You mentioned the 2% inflation target in the 2010s, an era dominated by monetary policy. The Fed had a 2% inflation target. Now in the 2020s, we have a primarily fiscally driven economy, or at least post pandemic. That's what it feels like. You've said you've turned 180 degrees on the inflation target question since your initial thoughts in 2012. Tell us about that. Explain that.
27:13 Speaker 03 Okay, so in 2012, there had been vague targets. In 2012, I believe, is when the Fed officially said where you have a 2.000% inflation target. And you go back and look, I wasn't at the Fed. I was critical. I was publicly critical on the grounds that that conveyed a way false sense of precision to me. That if if I asked you, just take the take the standard deviation of of the inflation series and ask yourself, how many observations would you need to get
27:56 Speaker 03 to be able to distinguish between a 2.0% inflation rate and a 2.1% inflation rate? And the answer was like decades. You'd need decades of monthly observation before you could tell, no, no, this is 2.1, not 2.0. So that was my critique. Fast forward to the inflation now, it goes way up. And the one wonky thing that you gotta know, which you already know, Barry, but the average person might not know, is the 2.0% inflation target is for personal consumption expenditure inflation, PCE inflation. That's not CPI.
28:41 Speaker 03 It's a little different. They have different weightings of what goes into it. We believe the PCE measure, which instead of the CPI measures a basket and the PCE measures everything consumers spend money on. So it's the better measure. But just as a technical, CPI of 2.3 is about the equivalent of a PCE of 2.0. Okay? We go through COVID, the inflation post-COVID soars to almost double digits. In long run, inflation expectations measured in the market never go up.
29:23 Speaker 03 They remain exactly, and they're off of CPI importantly. They remain exactly 2.3%. And so I said, either that's the biggest coincidence in the history of price indices or else the inflation target of 2.0 is serving as exactly the anchor that its advocates said it would be. And at that point, I changed 180 degrees. And I, not only am I not opposed to the inflation target, I think it's critical, it's vital, and it is serving as exactly the anchor that we needed.
30:01 Barry Ritholtz? So it's a magnet, not necessarily a landing spot.
30:06 Speaker 03 Exactly.
30:06 Barry Ritholtz? Really interesting. You mentioned-
30:08 Speaker 03 But it will be the landing spot. It will be. We will get to 2%.
30:12 Barry Ritholtz? You mentioned inflation expectations. When we look at some of the survey data in 2020 and 21, right before inflation really exploded higher, they were really low. And then go fast forward to June 2022, just as inflation was peaking, they were really high. How close attention does the Fed pay to inflation expectation? It seems that it's very much a lagging, not leading indicator.
30:42 Speaker 03 Ah, now fascinating. In a way, A, I should have said at the beginning, you know the rules. I'm not allowed to speak for the FOMC or the Fed, only for myself. That gives them great relief. That gives my colleagues great relief. In the world of food safety, the thing that characterizes almost every worker in the food supply chain is frustration. Why do we have to wash our hands all the time? There's no, nobody's ever getting sick from the food. And it's only because they're washing their hands all the time that nobody's getting sick from the food. I feel that way a little bit about inflation expectations. They are lagging indicators if the Fed has credibility and is doing it right.
31:26 Speaker 03 As soon as that's not true, they become very instructive, forward-looking indicators. The only thing that I want to emphasize as well is now we've actually started to get a couple of observations where not short-run expectations, but longer-run expectations actually bumped up in the University of Michigan survey. And since I had said this about how important inflation expectations were as a measure, a couple of folks asked me, well, does that make you nervous? And yes, but A, I've always said I value the market-based measures more than survey-based measures, and one month is no months.
32:11 Speaker 03 But make no doubt about it, if what we started to see was persistent, a persistent increase in long-run expectations of inflation in surveys and market, and for example, if you started to see long rates rising, one for one, with long-run inflation expectations, then that fundamentally, to me, means the Fed's job is not done, and we've got to go address that. Because if you, that's, that's one of the main lessons of the Volcker experience. And central banks around the world, if the expectations start rising, it is really hard to slay, you don't have to just slay the inflation dragon.
32:57 Speaker 03 You have to go convince people that it's going to stick. And it kind of the only way we know, the only way we know central banks have been able to convey that is to have awful recessions where they grind down wages to convince people, look, that we will keep the job market as suppressed as we need to, as proof that we're serious. So we don't ever want to get back into that situation if we can help.
33:26 Barry Ritholtz? Last question on inflation. You have mentioned that prioritizing real economic channels, the real economy, over wealth effects. Can you, can you explain this perspective? Why does the real economy channels matter more to the wealth effects? I, I always thought the wealth effect was so dramatically overstated because, you know, it's typically the wealthy that owns most of the stocks. And the real economy is the real economy, but I'm curious as to your perspective.
33:58 Speaker 03 Yeah, look, I would expand it a little more than just the wealth effect. My view is the Federal Reserve Act tells us we should be looking at the real economy, maximizing employment and stabilizing prices. The stock market, other financial markets, can influence those two things, partly through the wealth effect. But I, by the very first speech I gave when I got to the Fed, I went out to Indiana in a factory where they make the, where they make RVs, a community college where they train people for advanced manufacturing. And I said this, look, the Fed by law is supposed to be looking at the real economy.
34:44 Speaker 03 And financial markets, to the extent they're affecting the real economy, we should pay attention to them. But that's, that's it. Like, let's remember the priorities. I quantitatively agree.
34:56 Speaker 03 I agree with you. I think there are a number of people who overweight the the wealth effect and its impact on consumer spending. And I don't want us to get into a mindset that the Fed has an accomplishment if it does something and it changes the financial markets. That's indirect. In my worldview, if you get the real economy right, the financial markets will benefit. But doing something to try to create higher equity prices or benefit the financial market, that should not be the Fed's goal. The Fed's goal should be stabilize prices, maximize employment and and focus on the real side.
35:37 Barry Ritholtz? And if you do both of those, stock market tends to do well under those circumstances.
35:41 Speaker 03 The stock market does great.
35:42 Barry Ritholtz? Takes care of itself.
35:43 Speaker 03 And that's how it should be. That's how it should be.
35:45 Barry Ritholtz? So you've mentioned that conditions have not materially changed despite recent economic data. Do you still expect to see interest rates a fair bit lower over the next 12 to 18 months?
35:59 Speaker 03 I still do. If we can get out of this dusty environment. Look at the horizon and look at the through line. And when we're having a bunch of uncertainties that are about things that will increase prices, it's just throwing lots and lots of dust in the air and it's hard to see the through line. I still think that underneath there is a robust, healthy economy with employment pretty much stable at full employment, inflation headed back to 2%, GDP growth solid and strong, and we can get back to the resting point of normal in in that kind of environment.
36:44 Speaker 03 If we're gonna have an escalating
36:49 Speaker 03 Trade war that leads to higher prices and a stagflationary kind of environment where GDP growth is falling, I could revise my economic outlook, but I still think if we can get past this dusty part over 12 to 18 months, the SEP dot plot tells you that the vast majority of members of the committee believe that the ultimate settling point for rates is well below where we are today. And so I still think that that we can get there.
37:23 Barry Ritholtz? And our final question, I love your self description. You have said, I'm neither a hawk nor a dove. I'm a data dog. So now we have to add.
37:34 Speaker 03 That's right.
37:35 Barry Ritholtz? Hawks, doves.
37:36 Speaker 03 I don't like birds. I don't want to be a bird.
37:37 Barry Ritholtz? Hawks, doves and dogs. So explain how you as a data dog, how does that affect your approach to monetary policy, especially in 2025 where you're a voting member?
37:49 Speaker 03 I try to get out there. The first rule of the data dog kennel is that there's a time for walking and there's a time for sniffing and know the difference. And the time for sniffing is exactly when there is not clarity. Okay. And that is go get every data series you can, every frequency, don't throw anything away. If you can get private sector price information, get it. If you are looking at the job market, don't just look at payroll employment when there are a bunch of stuff with population growth and immigration that make it noisier. Don't just look at the unemployment rate when labor
38:33 Speaker 03 force participation changes can can affect it. Take ratios of unemployment to vacancies. Look at the hiring rate and the quit rate. Get out and talk to the business people in in our regions and the kind of information that goes into the beige book. All of those things are more real time than just the data series. But that mentality that if you if you have a question, get out there and sniff, that's the essence of the data dog credo. If you want to. And look, it comes with some downsides. If you are more theoretical ideological, there are times when you might be right and and you can get to the answer quicker. But
39:19 Speaker 03 This seems like a very uncertain environment, unusual, unprecedented business cycles, nothing like things we've seen before. So just personally, I'm more comfortable with that kind of approach.
39:33 Barry Ritholtz? So to wrap up, if you're an investor interested in what's going on in the economy, looking at inflation, looking at monetary policy, it's simply not as black and white as you often hear about. Many of the voting members of the FOMC look at the data that's out there as complex and not binary. Don't think that what you're hearing in these headline reports are remotely giving you the full color of what's happening. There are obviously a whole lot of moving parts here, a lot of complexity, and it's reassuring when you
40:12 Barry Ritholtz? hear from people like Chicago Federal Reserve President and FOMC voting member Austin Goolsbee, who are data-driven, who do focus on filtering out the noise but paying attention to the most recent trends, but following the through line. It's not simple, it's complicated. We really need to bring a more intelligent approach than we often see. As investors, we think about what the Federal Reserve is going to do in response to what inflation is doing. Perhaps if we had a little more sophisticated approach and a little less
40:55 Barry Ritholtz? binary, we wouldn't see people being so wrong about when the Fed's going to cut, when a recession is going to happen, what's going on overall with the robustness of the economy. Hey, it turns out that economics is hard. It's complicated. There are lots of moving parts. We oversimplify this at our own risk. I'm Barry Ritholtz. You've been listening to Bloomberg's At the Money.
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Previous JPMorgan’s Melissa Smith on Middle Market Banking Next Economic Risks Versus Media Alarmism with Philipp Carlsson-Szlezak Page updated November 3, 2026 · transcript and summary are machine-generated
