It’s the end of August. That means it is time once again for the Jackson Hole Economic Symposium. “Filmmakers have Cannes. Billionaires have Davos. Economists? They have Jackson Hole. The world’s most exclusive economic get-together takes place this week in the valley at the base of the Teton mountains, in a lodge that is a scenic 34 miles from Jackson, Wyoming.”   - Jeanna Smialek (NYT)

Smialek’s article gives the history behind the town and the conference.

The town of Jackson started out as a secluded town of 300 in 1920 that was home to outlaws. It was remote. It has evolved over the last century into an exclusive retreat. The town itself has a population of about 11,000.

The pristine nature and beauty of the mountains and lakes made this area a place of interest to conservationists. (If you watch Bloomberg or CNBC during the conference, you see the journalists with the amazing view as their background!) John D. Rockefeller, Jr. began buying up tracks of land north of Jackson, and in 1950 began building what is now Jackson Lake Lodge, where the conference is held. He donated the land to become the Jackson Hole section of Grand Teton National Park, and his donated the lodge as well.

The Kansas City Fed began holding annual conferences in 1978, and in 1982 the conference was moved to Jackson Hole. While the lodge is not posh, the fly-fishing is world class, which they hoped would attract then Fed chair Volcker, and avid fly-fisherman, to attend.   (He did) This marked the beginning of the tradition of the Fed Chair making opening remarks the first morning of the conference.

The Jackson Hole conference has consistently had around 120 attendees each year. There is usually a central theme to the papers and panels. The location and the stature of the invited guests have made it a coveted invitation. Attendees tend to be central bankers from around the world and academic rock stars. Since 2008, there are far fewer, if any, economists from the banking and financial world.

To get an idea of the speakers and session titles, the Kansas City Fed publishes the Agenda.

To watch this year’s speech by Chair Powell, you can use this CNBC link. It is the only speech/session that is made available to the public.

Here is a representative quote from that speech, followed by a summary of Powell’s points:

“We are attentive to signs that the economy may not be cooling as expected,” Powell said. “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.” (AP)

• Consumer spending is still strong.
• Inflation has come down from 7% in June of 2022 to about 3.3%, but two months of good data are not enough to change course, especially as the year-over-year core inflation is still high.
• Industrial and housing investment is cooling (as a result of higher rates), but GDP has not. (And housing may be headed back up.)
• The labor market is rebalancing, but is still not balanced.
  • Labor force participation rates and immigration have moved up
  • Labor force participation rates for women was at an all-time high in June
  • Hours worked and the work week have moved downward
  • Real wage growth has increased as inflation has decreased.
• Restoring price stability is essential to the fed achieving its dual mandate.

Analysts summed it up as follows:

• Powell was generally hawkish in his outlook
• There was no mention of potential rate cuts
• Progress has been made but the economy is still running too hot.
• Question of whether or not wages are driving inflation, or inflation is driving wages (analysts vote for the latter.)
• One analyst pointed to the rise in car prices and the price of everything related to cars (repairs, insurance, etc.) as a key driver of core inflation if you remove housing.

The European Central Bank Chair Christine Lagarde gave the lunchtime address. (AP2) While European Union (EU) has slightly higher inflation (peak of 10.6% last year and 5.3% now), the ECB uses the same 2% target. While interest rates in the US are in the 5.25-5.5% range (from zero), the ECB has raised its benchmark rate from minus 0.5% to 3.75%. Another difference between the EU and the US is that the EU’s growth is stagnant and much closer to recession. Europe is more directly and severely impacted by disruptions related to the pandemic and Russia’s invasion of the Ukraine specifically trade barriers and related fuel supply shocks.

Here are some of Lagarde’s key comments:

• “While progress is being made, the fight against inflation is not yet won.”
• “If we also face shocks that are larger and more common — like energy and geopolitical shocks — we could see firms passing on cost increases more consistently.”
• “We don’t change the rules of the game halfway through,” she said.

I think the challenge for these policy makers is getting a better way to generate forward-looking indicators rather than the current indicators that are backward looking. It takes time for the policies to have an impact, and it is difficult to fine-tune them so as to go just far enough without going beyond where they need to if you are only looking in the rear-view mirror. If any of the academic rock-stars came up with solutions, we should be hearing about it following the Symposium.

About the Author

Beth Tallman

Beth Tallman entered the working world armed with an MBA in finance and thoroughly enjoyed her first career working in manufacturing and telecommunications, including a stint overseas. She took advantage of an involuntary separation to try teaching high school math, something she had always dreamed of doing. When fate stepped in once again, Beth jumped on the opportunity to combine her passion for numbers, money, and education to develop curriculum and teach personal finance at Oberlin College. Beth now spends her time writing on personal finance and financial education, conducts student workshops, and develops finance curricula and educational content. She is also the Treasurer of Ohio Jump$tart Coalition for Personal Financial Literacy.

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