Inflation remains high and the 2% target is further away than it was this time last year. There are signs all over that the economy is overheating — the strange labor market where hiring and firing remains low, while GDP is growing, but mostly due to AI and the data center buildout — and Austan Goolsbee is worried about how uncertain central bankers are about what to do to cool the economy.

The next shock, he tells us, could be around the corner. In this conversation, Goolsbee discusses the challenges facing the Federal Reserve as it tries to balance inflation concerns with economic growth driven by artificial intelligence investments.

He emphasizes that the current economic environment is unusual, with strong GDP numbers masking underlying uncertainties. The labor market continues to show resilience despite elevated inflation, creating a complex policy landscape.

Goolsbee's concerns reflect broader worries within the central banking community about whether current monetary policy is sufficient to address inflationary pressures without stifling growth.