Chicago Fed's Goolsbee Warns Sticky Energy Prices Risk Asian Stagflation, AI Boom May Overheat Economy

Chicago Federal Reserve President Austan Goolsbee warned on May 28, 2026, that energy-driven inflation is proving far stickier than markets expected, posing a stagflationary shock to import-dependent Asian economies. He also cautioned that an artificial intelligence investment boom could prematurely overheat the U.S. economy and stoke prices. Speaking at an Institute for Monetary and Economic Studies conference in Japan, Goolsbee said oil futures had markedly underestimated current price levels. Brent crude settled up 1.81% at $96 a barrel, while West Texas Intermediate rose 1.71% to $90.21—both sharply higher than the roughly $72 and $67 levels seen before U.S.-Israeli strikes on Iran. The International Energy Agency estimates Iran’s effective blockade of the Strait of Hormuz has disrupted over 14 million barrels per day of Middle East supply. Goolsbee described the Asian situation as an "old-style" stagflation where slowing growth combines with high inflation, putting central banks in a bind. He also flagged risks from AI, suggesting investors may be front-running anticipated productivity gains, driving up consumption and infrastructure costs—including electricity and construction wages—before actual efficiencies materialize. He dissented from the Fed's final 2025 rate cut, citing inflation persistence.