US inflation risks are intensifying again, with Fed officials warning that price pressures are no longer easing but turning higher as oil shocks and tariffs continue to feed through the economy. Speaking in a joint interview, Austan Goolsbee said inflation is now “going toward red,” highlighting a shift toward more persistent and troubling dynamics.
Goolsbee described the outlook as “at least orange… going from orange to red lately,” pointing to rising gasoline prices and what he called a new stagflationary shock layered on top of existing pressures. He noted that tariff-driven price increases had been expected to fade but “kind of didn’t go away,” adding to concerns that inflation could remain elevated.
Beth Hammack echoed those concerns, emphasizing that inflation has been above target for five years and largely “moving sideways” over the past two. She characterized current conditions as a “vibrant orange,” underscoring persistent price pressures that are proving difficult to bring down.
On the labor market, however, both officials pointed to relative stability. Hammack said the unemployment rate near 4.3% is close to full employment, describing conditions as a “fragile balance” in the yellow-to-green range. Goolsbee was more cautious and gave it a “yellow”, noting a “low hiring, low firing” environment driven by uncertainty, but still not weak enough to force policy easing.
The color framework used here offers a simple guide to Goolbee’s and Hammack’s thinking: green signals an economy on track, yellow reflects balance with some caution, orange points to elevated concern, and red implies conditions that risk getting out of control. With inflation now shifting from orange toward red while the labor market remains closer to yellow, the Fed is facing a clear imbalance—rising price risks without sufficient weakness in employment to justify easing.
