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These days, conversations about the economy — either U.S. or global — don’t usually include words to the effect of “something strange and wonderful has happened.” By many measures, there’s too much uncertainty.

But in his keynote at the 2025 SIEPR Economic Summit, “strange and wonderful” is exactly how Austan Goolsbee, the president of the Federal Reserve Bank of Chicago, characterized productivity growth — an economic indicator he thinks gets too little attention. In the last two years, U.S. productivity has grown faster than it did in the decade before the COVID-19 pandemic.

As a key determinant of standards of living, Goolsbee noted, it’s important to understand what’s driving the surge and whether it will last. In exploring possible explanations, Goolsbee settled on this answer: artificial intelligence. If that’s right, he said, that means “there’s more productivity kick” in store for the U.S. economy. “I’m intrigued. I’m hopeful. I’m excited,” said Goolsbee, who also serves on the Federal Reserve’s interest rate-setting Federal Open Market Committee (FOMC).

He’s also a little bit worried that excitement over AI’s promise is fueling massive investments that risk overheating the economy. If that happens, “it will make the fight against inflation harder,” Goolsbee said.

But for now, Goolsbee is optimistic that inflation is on track to return to the Fed’s goal of around 2 percent growth per year. “I think we slayed that dragon,” he said, adding that most FOMC members think that interest rates “will eventually settle somewhere fairly far below where we are today.”

NASA + DMV = The Fed life

Though he’s optimistic about lower interest rates, widespread tariffs — and the havoc they could wreak on supply chains — would introduce a “high degree of difficulty for the Fed” as monetary policymakers assess whether any price increases that follow are short-term or something more serious.

In taking questions from the Summit audience, Goolsbee downplayed criticism that the Fed failed to act sooner to prevent the collapse of Silicon Valley Bank in March 2023, which set off a crisis that resulted in three of the four largest bank collapses in U.S. history. Silicon Valley Bank failed because it “made a bet that rates wouldn’t go up," he said. "And then when rates went up, it blew them up.”

On a lighter note, Goolsbee, who chaired President Barack Obama’s Council of Economic Advisers and was an economics professor at the University of Chicago before joining the Chicago Fed, repeatedly regaled the Summit audience with his trademark humor.

Asked, for example, what else a FOMC member does besides set interest rates, Goolsbee gave a detailed response before summing it up this way: “It’s about 85 percent you work at NASA and it’s about 15 percent you work at the DMV.”

Highlights of the 2025 SIEPR Economic Summit

Photos by Ryan Zhang.