Federal Reserve Governor Lisa D. Cook said the U.S. economy remains resilient and growing at a solid pace, but added that inflation is still too high and that risks have shifted toward prices rather than employment.

Speaking at the 2026 Economic Luncheon of the Anchorage Economic Development Corporation in Anchorage, Alaska, on August 5, 2026, Cook said inflation has remained above the Federal Open Market Committee’s 2% target for more than five years. The personal consumption expenditures price index rose 3.7% in the 12 months through June, while core prices, excluding food and energy, increased 3.3% over the same period.

Cook said elevated energy prices tied to the conflict in the Middle East have contributed significantly to inflation over the past year. She also pointed to a second source of price pressure: companies’ increased capital spending to build out artificial intelligence infrastructure. According to Cook, that investment wave has lifted prices for semiconductors, high-tech equipment, software and utilities, underscoring how a technology boom can ripple through supply chains and broader business costs even before it shows up in consumer spending.

On the labor market, Cook said conditions have remained stable in a low-hire, low-fire environment. The unemployment rate was 4.2% in June, little changed from a year earlier and consistent with many economists’ estimate of the natural rate of unemployment. Job growth has been modest over the past year, though it picked up in the spring, averaging more than 100,000 jobs a month in April, May and June. She said layoffs remain low, as reflected in historically low initial claims for unemployment benefits.

Cook said the low-hire environment can be especially difficult for new entrants to the labor force and may help explain weaker worker sentiment. She noted that employers may be hiring less because of longer-term structural changes, pandemic-era over-hiring or increased work from home. She also said AI remains a significant risk for workers, even though the most severe predictions of job losses have not yet materialized.

She described overall U.S. growth as solid. After adjusting for inflation, output grew at a 1.8% annual pace in the first half of the year and is expected to grow faster in the second half. Business investment rose at a 10% annual rate in the first half, helped by AI-related spending, while consumer spending increased at close to a 2% rate. Residential investment remained a weak spot, edging down about 3%.

Addressing monetary policy, Cook said inflation risks currently outweigh employment risks and that she is prepared to support a rate increase if necessary to bring inflation down. At the same time, she said some disinflationary forces may already be in place and could help push inflation back toward target without a rate move.

She cited three such forces. First, she said the effects of tariffs announced last year on the overall price level are mostly behind us, even though they still weigh on 12-month inflation readings. Second, she said some forecasters expect oil prices to decline by year-end, offering some relief, though uncertainty remains elevated. Third, she said some of the recent goods-price pressure reflects AI-related demand for chips and other high-tech items, and that these pressures may ease as supply chains adjust and efficiency gains emerge.

Cook said she did not think it was appropriate to change rates while those forces play out, but she added that if signs of continued disinflation do not appear soon, she is prepared to act. She warned that five years of above-target inflation raises the risk that higher inflation becomes entrenched in price- and wage-setting behavior, making the Fed’s push to restore price stability more important for keeping expectations anchored.

Turning to Alaska, Cook said the state faces some of the same challenges as the rest of the country, including higher living costs since the pandemic and recent signs that inflation pressure is picking up again. She said the burden may be especially heavy in Alaska because households there have historically faced higher prices than other Americans, particularly in remote areas.

She said Alaska’s labor market appears stable. The state’s unemployment rate was 4.4% according to the Bureau of Labor Statistics, lower than any pre-pandemic reading. Initial unemployment claims also remain low. Cook said health-care employment has driven job gains in recent years, while federal government employment, which is a larger share of Alaska’s workforce than in most states, has declined notably over the past year.

Cook also highlighted demographic pressures. She said Alaska’s working-age population, ages 18 to 64, declined slightly in 2025, while the number of residents aged 65 and older increased 3.2% last year. She added that Alaska is facing a shrinking labor force and an aging population.

Another difference, she said, is the state’s large oil and gas sector. Employment in the sector stood at 9,700 in June and has broadly moderated over the past decade, though it added a significant number of jobs over the past 12 months. Cook said Alaska experiences a distinct tradeoff when energy prices rise: the state government’s fiscal position improves, but many households, especially in rural communities, face higher energy costs.

Cook also discussed consumer sentiment, saying there is a disconnect between official economic data and how many workers and business leaders view the economy. She said sentiment data show people are less optimistic than one might expect given a solid labor market, and that perceptions of job availability have worsened.

She said low sentiment appears to stem from three main factors. First, AI has increased uncertainty about future employment, especially because hiring remains low and some evidence suggests hiring in AI-vulnerable sectors has slowed. Second, long-running structural changes have made life harder for middle-class families, especially rising housing costs. In Alaska, she said house prices have increased fivefold since 1990, more than twice the rise in the overall price index for goods and services. Nationally, she said costs for education, health care, elder care and childcare have risen faster than wages, while household debt has increased and intergenerational mobility has declined. Third, she said the past five years of high inflation have made those long-term cost pressures more visible.

Cook said these challenges require a broad policy response beyond monetary policy, but added that the Federal Reserve’s contribution is to ensure inflation returns to and stays at target.

“If you take away one thing from this talk, I hope it is that I am firmly committed to restoring price stability,” Cook said. She added that bringing inflation back to target is essential to fulfilling the Fed’s dual mandate and would provide relief to families facing elevated prices. She also said price stability could help narrow the gap between the more cautious outlook many Alaskans and Americans feel personally and the stronger readings for growth and employment in official data.

Cook thanked the Anchorage Economic Development Corporation for the invitation and said she looks forward to continuing to hear from workers, families and business leaders in Alaska.