The Global Economy in Turbulent Times

CHAPTER 34 Jackson Hole “Gunfight” Shoots Blanks¹

Twenty-five years ago, as a central banker, I used to attend the Jackson Hole, Wyoming, annual monetary symposium organized by the Kansas City Federal Reserve Bank. Those days, the tone used to be unusually policy heavy. The meetings tended to focus on loftier academic research, including new ideas in practical monetary matters and empirical work in rendering monetary policy more “scientific.” As years passed, the research became increasingly mathematical. More recently, this symposium assumed a high profile—featuring prominent names in monetary policy formulation, application, and forecasting. Always, the center of attraction is the Fed chairman’s keynote address.

The 2010 meeting in late August didn’t disappoint. Not unlike the previous two years, Fed Chairman Ben Bernanke’s statement was anxiously awaited. This time for indications on the economic outlook in the face of anemic US activity, and the direction monetary policy would take to get the US economy off what Harvard Professor Lawrence Summers labeled “a statistical recovery and a human recession.” Keenly awaited are views of critics on both sides of the economic divide. As he spoke, more lukewarm news was released: US hiring and manufacturing output cooled in August 2010, indicating companies were scaling back as US recovery showed signs of stumbling. Indications are private payrolls rose by 47,000 (71,000 in July) while unemployment rose to 9.6 percent. Others showed ...