Business
Chicago Fed President on Inflation, Tariffs and the Local Economy
It’s getting more expensive to live.
Costs of everyday essentials like groceries and gas are steadily climbing while wages remain largely stagnant, which is particularly true in the Chicago area where the inflation rate is higher than anywhere else in the country — an unwanted first-place position.
Chicago’s rate of inflation now sits at 4.3%, outpacing the national average of 3%, according to a report from WalletHub.
An ideal inflation rate shouldn’t surpass 2%.
“The worst part of the economy is the cost of living and the inflation and affordability crisis,” said Austan Goolsbee, president of the Federal Reserve Bank of Chicago.
The bank represents Iowa, the majority of Illinois, Indiana, Michigan and Wisconsin, creating and implementing financial and economic policy for the region.
“The Chicagoland region is the capital of the Midwest economy,” Goolsbee said last week in a conversation hosted by the Chicagoland Chamber of Commerce.
Although Chicago has a diverse economy, the city is experiencing slower economic growth than its other metropolitan counterparts due to smaller population growth.
As for the future outlook, Goolsbee noted that inflation and economic health are notoriously difficult to predict given the ever-changing conditions — like new policies coming from elected officials.
The Trump administration’s pending 25% tariffs on Canada and Mexico lend a level of uncertainty to local manufacturers.
“The thing to note in Chicago, the state of Illinois, and really the whole Midwest, is we’re significantly more manufacturing-intensive than the rest of the national economy,” Goolsbee said. “So, tariffs will affect Illinois much more than the average economy.”
Despite challenges, Chicago has seen growth in other sectors such as transportation and logistics, technology and education.
The local federal reserve will react appropriately to whatever economic news comes out of the White House, Goolsbee said.
“It’s our Midwest motto — there’s no bad weather, there’s only bad clothing,” Goolsbee said. “We look at the conditions and decide on what jacket to wear.”
