68 customizable lessons, aligned with National Standards, exams and more.
Read NGPF's school-by-school analysis of financial education in America today
Activities
Advocacy
Behavioral Economics
Best Of
Budgeting
Buying a Car
Career
Checking
Consumer Skills
Credit
Cryptocurrencies
Current Events
Curriculum Announcements
Economics
Entrepreneurship
Edpuzzle
ELL Resources
FinCap Friday
Gambling and Sports Betting
Insurance
Interactive
Investing
Math
Paying for College
Philanthropy
Podcasts
Press Releases
Professional Development
Question of the Day
Savings
So Expensive Series
Taxes
Teacher Talk
Fed watchers and Wall Street analysts anxiously waited to hear Jerome Powell’s speech at this year’s Jackson Hole Conference on Friday (8/26). As expected, he chose his words carefully, as his use of the word “transitory” in last year’s speech to describe the inflation we were experiencing at the time came back to haunt him. But the market response to the speech was a bit of a surprise.
What Happens at Jackson Hole?
Economists and policy makers from central banks and academic institutions around the world gather annually for an Economic Policy Symposium to discuss pressing economic issues, hosted by the Federal Reserve Bank of Kansas City. Also in attendance are financial and economic journalists. It grew from its humble beginnings in 1978 with a focus on agriculture to what it is today. The story behind the move to Jackson Hole (and a broader topic and audience) in 1982 was to attract the attendance of the Fed Chair, Paul Volcker, who happened to be a great fan of fly-fishing. For more on the symposium in general, you can read this explanation from the Kansas City Fed website, and this timeline of its history.
Kicking off the first day of presentations is the Chairman of the Fed, and there is usually much speculation about what the Chairman will say. The speech gets over-analyzed by pundits, who seemingly debate the meaning of every line! What follows his speech is a series of presentations and panel discussions centered on the topic for the Symposium. The focus of this year’s symposium is “Reassessing Constraints on the Economy and Policy.” Every so often, a presentation will introduce a novel or controversial concept that will also get much attention.
The Much Anticipated Speech
The following comment from Powell’s 2021 almost 20-minute speech came to haunt him as the year progressed:
“And from long experience, we expect the inflation effects of these increases to be transitory.”
This year’s speech, in comparison, was short and succint—about nine minutes. Here are the points Powell made:
Powell said the Fed is drawing on three lessons from history:
1) Central banks should take responsibility for price stability, even though the Fed’s tools just work primarily the demand side.
2) Public expectations of future inflation influence actual inflation as they are entrenched in wage and price setting. The inflation expectation needs to subside.
3) The hope is that if they take more aggressive steps sooner, it won’t take too long to accomplish. "We will keep at it until we are confident the job is done.”
Commentary
The consensus descriptor used by the media following the speech has been “resolute.” “Hawkish” was also used a lot, especially because Powell did NOT use the term “soft landing” anywhere in his speech. And the line most quoted from the speech was the following:
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.”
In sum, the expectation is that the Fed will bring interest rates up beyond the long-run “neutral” level (reached after the July rate hike) to a sufficiently “restrictive” level and will keep them there until inflation abates. One month of better data is not sufficient to back off of the rate increases, and another 75 basis point increase is not off the table. It was a bit surprising to many that the stock market took a deep dive following the speech. Perhaps Wall Street did not anticipate Powell would be so “resolute” and thought the Fed might slow down their rate increases as prices appear to be peaking. His use of the word “pain” may have been the trigger. (NPR)
Lesson Ideas
1) Students can read the NPR article that is a decent summary of what has been included in this post as background.
2) Have students listen to both the 2021 and 2022 speeches. (If you want to make it entertaining, you could listen to or review the transcripts and make bingo cards by pulling out key terms used, or make a list of some key words and have the students track how many times they were used in each speech.)
Here are a few possible discussion questions:
If you only have a short period of time to fill, just listen to the most recent speech and focus on the relevant questions for discussion.
NGPF Podcast: Abby and Katie of ClassEquity on the power of classroom economies
Collaborate with Educators At NGPF Professional Development This Week (August 29- September 2)
NEW Activity - MOVE: Interest Rate Ripple Effect (FOMC Press Conference Sep 18, 2024)
5 Resources to Decipher the U.S. Debt Clock
Interactive: The Federal Budget in 2023
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.
Join the more than 12,000 teachers who get the NGPF daily blog delivered to their inbox:
MOST POPULAR POSTS
1
Question of the Day: How much did Taylor Swift's Eras Tour gross during its two-year, 149 concert run?
2
Get Festive with NGPF Resources and Activities
3
Useful Personal Finance Movies and Documentaries with Worksheets
4
NEW Holiday Personal Finance Posters
5
NEW NGPF Review Materials Released
Before your subscription to our newsletter is active, you need to confirm your email address by clicking the link in the email we just sent you. It may take a couple minutes to arrive, and we suggest checking your spam folders just in case!
Great! Success message here
New to NGPF?
Save time, increase engagement, and teach life-changing financial skills with NGPF’s free curriculum
1.Register for a free TeacherAccount
2.ExploreSemester Course
3.Findstudent favorites
4.LeverageNGPF Academy
Your new account will provide you with access to NGPF Assessments and Answer Keys. It may take up to 1 business day for your Teacher Account to be activated; we will notify you once the process is complete.
Thanks for joining our community!
The NGPF Team
Complete the form below to access exclusive resources for teachers. Our team will review your account and send you a follow up email within 24 hours.
To speed up your verification process, please submit proof of status to gain access to answer keys & assessments.
Acceptable information includes:
Acceptable file types: .png, .jpg, .pdf.
Once you submit this form, our team will review your account and send you a follow up email within 24 hours. We may need additional information to verify your teacher status before you have full access to NGPF.
Take the quiz to quickly find the best resources for you!