Wisconsin’s economy is on solid footing, with unemployment at 3.4%, but manufacturers are facing a series of cost pressures that could weigh on the state’s economy, said Federal Reserve Bank of Chicago President Austan Goolsbee.

Goolsbee was in Wisconsin on Tuesday to speak at a Kenosha Area Business Alliance luncheon for Southeast Wisconsin business leaders.

After the engagement, Goolsbee sat down with the Milwaukee Business Journal to discuss tariffs, labor shortages and credit conditions affecting the region’s economic outlook.

The conversation has been edited for length and clarity.

With state unemployment at 3.4%, does “stagflationary” risk apply right now?

There is a “stagflationary” direction risk. When I say stagflationary risk, I mean just something that might drive up the unemployment rate and up the inflation rate at the same time.

Any cost shock to economies that are disproportionately heavy in manufacturing — like Wisconsin, like the Kenosha area — anything that affects the costs on the supply chain is going to be stagflationary in that sense. Tariffs would certainly count as one of those.

Read more at the Milwaukee Business Journal.