Fed’s Goolsbee says an AI spending slowdown wouldn’t necessarily mean a recession

Chicago Fed President Austan Goolsbee has a message for anyone treating the AI boom as the economy’s only engine. A slowdown in AI investment, he says, does not necessarily mean a recession. He isn’t brushing the risk aside, though. Goolsbee stressed that the Fed needs to keep a close eye on what a cooling AI spending cycle could do to financial stability. What Goolsbee is actually worried about In an interview on October 13, 2026, he described rising costs tied to data centers, semiconductors and related inputs as signs of “aggregate overheating.” Put simply, the AI buildout may be demanding more from the economy than it can comfortably supply. He pointed to specific pressure points inside the Chicago Fed’s district. These include higher land prices near data centers, more expensive electricity and construction, and a shortage of electricians. He also flagged delays in getting electrical equipment. Back in September 2026, Goolsbee warned that AI spending risks pushing total output beyond what the economy can sustainably produce. The dot-com shadow Goolsbee has drawn a comparison to the dot-com bubble. His point: if AI investments fail to deliver adequate returns, the economic fall...