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What is the Jackson Hole Symposium and Why it’s Important to Investors?

With almost a month to go before the next FOMC meeting, investors have set their focus on the Jackson Hole Economic Symposium – the conference organized each year by the Kansas City Federal Reserve Bank. Last
year’s symposium (held online for attendees) allowed the Fed Chair to recap the challenges of the previous 12 months of pandemic management. One Powell utterance that was mostly overlooked last year was his comment on inflation when he pointed out that demand was outstripping pandemic-reduced supply. He said it was a big factor in why inflation was running ahead of the Fed’s 2% target. One year later, inflation is likely to be the most discussed topic, and market participants and others interested in the economy will be listening intently to how strongly the U.S. Central Bank will need to squelch growth to bring damaging inflation down.

About the Jackson Hole Event

The Kansas City Fed has been hosting the annual conference to discuss the economy since 1982 at a lodge in Grand Teton National Park. The attendees are central bankers from around the world, economists from the 12 Federal Reserve Districts, academics, influential economic leaders, policymakers, and journalists.

Image: Jackson Hole Symposium attendance (Kansas City Federal Reserve)

Each year there is a theme. For example, “Guided by
the Stars” in 2018 set the tone for the year’s whitepapers and speeches the event is known for. Powell’s 2018 address is considered his most memorable. It outlined how he thinks about critical but unmeasurable variables like the natural rate of interest (R-star) and the natural rate of unemployment (U-star). For 2022 the theme is “Reassessing Constraints on the Economy
and Policy.” To be sure, the world will be listening – so far this decade, Central Banks have seemed to push the barriers of previously believed boundaries and constraints on policy. There will also be a number of whitepapers made public on the subject; these will be released Thursday evening. Powell’s speaking slot is first thing Friday (10 am EDT)

The presentations and discussions are not broadcast (except for Powell’s speech this year), but all of the proceedings in the room are on the record, and economic journalists are on hand to report what they hear. The Kansas City Fed publishes the papers on its website.

Powell’s Words

One of the most powerful market-moving things a Fed Chair can do is talk. Every word of his speech will be scrutinized; they know this, so they choose their words wisely. Traditionally, the Fed chair uses the Jackson Hole speech to deliver a particularly important and long-range message, similar to a president’s State of the Union.

It is highly unlikely he will give any guidance as to what he is doing next month. Instead, he’ll be recognizing paths and cultivating an understanding of changes in the economic climate and policies to foster desired long-term results.

Is it all Business?

In the early 1980s, the Kansas City Fed leaders learned that the best way to ensure Fed chairman Paul Volcker would accept an invitation was to locate the event somewhere with good fly fishing in late August. Jackson Hole was it!

It also helps that the late summer ski resort setting is gorgeous. The weather is usually great, and the Kansas City Fed has done a commendable job cultivating compelling topics, papers, and guest lists over the years.

The eventgoers are not surrounded by luxury. Rather, it’s at a lodge in a national park that remains open to the public. It features a big grizzly bear trophy in the lobby. The rooms are rustic.

In and around the conference, it is common to see powerful economic policymakers from around the world wandering the hotel lobby, along with American tourists who drove in an RV or a group of motorcycles.

Some symposium attendees adopt Western fashion, wearing cowboy hats, boots, and pearl snap shirts. Others find more traditional business casual more their flavor. After the second day of economic meetings, attendees usually go to a Friday dinner with Western-themed entertainment, such as a horse whisperer.

Take Away

Four decades after the first Jackson Hole Economic Symposium, it is an important event for those in the meetings and an important event for those with a stake in the U.S. economy. History is made at these meetings as subtle shifts have a big impact on the future wealth of the nation. The mountain resort lends itself to a relaxed feel. Behind closed doors at the symposium itself, the small amount of attendees is closer than at many economic conferences.

Beginning at 10 am EDT tomorrow, the markets will have their answer as to what the Fed Chair will say. If it is in line with his more recent comments, he will place inflation as a priority and word it in a way where it is understood but not feared by those with business interests.

Paul Hoffman

Managing Editor, Channelchek

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