Governor, Chicago Fed chairman address state treasurers conference

(The Center Square) – Key players are discussing the U.S. economy and monetary policy at the National Association of State Treasurers conference in Chicago.

Illinois Gov. J.B. Pritzker welcomed treasurers and said they have a sacred responsibility with taxpayers' dollars.

"People have to trust you. They have to know you're going to do the right thing. And when you do it over and over and over again, it gives people a greater sense of trust in government," Pritzker said.

Chicago Federal Reserve President and CEO Austan Goolsbee said the Fed's recent half-point interest rate cut was likely just the beginning.

"Take the long arc. If conditions continue like this, there are a lot of cuts to come over the next 12 months," Goolsbee said.

Goolsbee said inflation is way down and has been coming in at the 2% target for multiple months. He described Federal Reserve Board Chair Jerome Powell as a "first-ballot Hall of Fame Fed chair on anyone's voting card."

Professor John H. Cochrane is Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution of Stanford University. He told The Center Square that many measures of inflation are still above 2%. Cochrane said CPI is still 2.5% and PCE deflator higher.

In addition, Cochrane said that prices remain about 20% higher than before inflation broke out in February 2021. He said the Fed completely missed inflation.

"Just how did an institution whose first announced job is to contain inflation let inflation hit 8%? OK, it's back now, but if you're driving me down the freeway and swerve half a mile off and then get back again, we would normally have a bit of a discussion about just what happened and why," Cochrane said.

Speaking with Illinois Treasurer Michael Frerichs at the treasurers conference, Goolsbee said his office is keeping an eye on commercial real estate and high office vacancy rates.

"We are definitely monitoring that. That's one of the weak spots in the financial system, in the economy," Goolsbee said.

Goolsbee was asked what impact back-to-office mandates might have on employment trends.

"Potentially not good. If back-to-office mandates led to a drop in labor force participation, we would feel it," Goolsbee explained.

The National Association of State Treasurers conference is scheduled through Wednesday morning.