Chicago Fed President Goolsbee Expresses Caution on Rate Cuts Amid Government Shutdown Data Blackout

This analysis is based on CNBC’s interview with Chicago Fed President Austan Goolsbee [1] published on November 6, 2025, at 9:24 AM EST, where he discussed the challenges facing monetary policy amid an ongoing government shutdown that has created a critical information vacuum for policymakers.

Goolsbee’s comments reflect a growing consensus among Federal Reserve officials facing an asymmetric risk environment. The shutdown, which began on October 1, 2025, has suspended the release of crucial economic data including CPI reports, employment figures, retail sales, and industrial production statistics [3]. This data blackout forces policymakers to rely on private-sector indicators, which Goolsbee notes provide limited visibility on inflation trends [1].

The inflation picture presents particular concern, with core inflation running at a 3.6% annualized pace over the past three months and core services inflation approaching 4% [1][2]. These figures stand in stark contrast to the Fed’s 2% target and represent what Goolsbee described as a trend “going the wrong way” that makes him “uneasy” about further policy easing [1].

The employment landscape presents a complex picture. While the Chicago Fed’s Labor Market Indicator shows unemployment stable at 4.3% and Goolsbee noted the rate “has not been going up” over the past 12 months [1][2], private-sector data reveals emerging concerns:

• ADP payroll growth turned negative in September [2]
• Major layoffs announced by companies including Amazon and UPS [2]
• Beige Book showed more employers reducing headcount due to weaker demand [2]

This divergence between official unemployment stability and private-sector weakness creates additional uncertainty for policymakers weighing the appropriate policy stance.

The interview occurred during a volatile trading session, with major indices showing mixed performance. The S&P 500 closed at 6,755.19 (-0.48%), the Dow Jones at 47,060.50 (-0.41%), and the Nasdaq at 23,280.71 (-0.77%) [0], reflecting ongoing market uncertainty surrounding Fed policy.

Goolsbee joins other Fed officials including Lisa Cook and Mary Daly in expressing hesitation about further cuts, creating a more hawkish tone that could support higher yields and pressure equity valuations [2]. His increased threshold for cutting suggests growing resistance to further easing, particularly given his voting role at the December FOMC meeting.

Goolsbee highlighted the asymmetric risk profile: “If there are problems developing on the inflation side, it’s going to be a fair amount bit of time before we see that, where if it starts to deteriorate on the job market side, we’re going to see that pretty much right away” [1]. This naturally biases policymakers toward caution when data is limited.

The timing of government reopening will be crucial for the December decision. If federal statistical agencies resume operations before the FOMC meeting, delayed data could provide the clarity needed for a more confident policy decision.

The current reliance on private-sector indicators highlights the importance of understanding the limitations and potential biases in alternative data sources when official statistics are unavailable.

1. Policy Error Potential:
   Acting without complete data increases the risk of either premature tightening (if inflation proves transitory) or delayed accommodation (if labor market deterioration accelerates)
2. Market Volatility:
   Extended uncertainty around Fed decisions could amplify market swings as investors price in various policy scenarios
3. Data Shock Risk:
   When government data resumes, it could reveal significantly different trends than private indicators have suggested

• Government shutdown resolution timeline and data release schedules
• Private-sector employment and inflation indicators for early trend signals
• Fed speaking calendar for additional insights from voting members
• Market-based inflation expectations and credit condition indicators

The combination of elevated inflation trends, emerging labor market concerns, and the ongoing data blackout creates a challenging environment for monetary policy decision-making. Goolsbee’s caution reflects legitimate concerns about inflation persistence while acknowledging potential employment weakness that could justify continued accommodation.

The December FOMC decision will likely hinge on whether the shutdown ends sufficiently early to provide meaningful data, and whether private-sector indicators continue to show divergent trends between inflation and employment. Market participants should prepare for increased volatility around policy-sensitive assets as this uncertainty persists.