Chicago Fed President Austan Goolsbee stated that a potential decline in AI-related investment would not automatically trigger a recession. However, he emphasized that the Federal Reserve must monitor the impact of a cooling AI spending cycle on financial stability.
In an interview on October 13, 2026, Goolsbee identified rising costs for data centers, semiconductors, and related inputs as evidence of economic overheating. He noted that the AI infrastructure expansion is currently straining supply capacities.
Specific regional pressures include increased land values near data centers, higher electricity and construction costs, and a shortage of electricians. Goolsbee also highlighted delays in the procurement of electrical equipment as a significant bottleneck.
Goolsbee warned that if AI productivity gains fail to match investment levels, the economy could face stagflation. He noted that a 25 basis point rate hike might be insufficient if demand-driven overheating persists, suggesting that more aggressive policy measures could be necessary.
As of mid-October 2026, market expectations pointed toward the Federal Open Market Committee maintaining current rates at the October 28 meeting. Analysts are now looking for signals in official commentary to determine if concerns regarding AI-driven overheating are shared by other Fed officials.
