Austan Goolsbee Warns AI Expansion May Overheat Economy

Federal Reserve Bank of Chicago President Austan Goolsbee is advocating for a return to traditional economic analysis centered on consumer spending over AI-driven projections. In an interview with Fortune, Goolsbee warned that the rapid expansion of AI data centers is inflating costs for HVAC and construction resources, creating sector-specific overheating that could eventually trigger aggregate economic overheating and services inflation.

Goolsbee identified a potential decline in broad-based consumer spending as the primary risk to continued economic stability and growth. He contrasted this view with the optimistic productivity forecasts shared by tech leaders such as Elon Musk, Mark Zuckerberg, and Jensen Huang. He further noted that geopolitical supply shocks have become more persistent than traditional economic models typically suggest.

While Goolsbee emphasizes these risks, Federal Reserve Chairman Kevin Warsh stated that inflation remains the sharpest focus for the Federal Open Market Committee as it balances employment stability and inflation targets.