Jackson Hole Anticlimax For the Fed

Analysts were mostly correct about the actions taken at the Jackson Hole meeting of the central bankers and their advisors…and that was not all that comforting to the markets. Once again the message from Federal Reserve Chairman Ben Bernanke was tantalizing but not definitive.

The mantra remains the same as it has been for months -- “We’re prepared.” If conditions worsen enough, there are still tools that can be used. The problem is that the economy is teetering somewhere between really bad and sort of good. There is no clear movement in either direction, leaving the Fed at something of a loss.

Analysis: If one looks at the data, there is something to depress and encourage on a daily basis. The jobless rate is not getting much better, but it isn’t getting much worse either. Housing starts are up and so are prices, but the manufacturing sector has slowed somewhat. Inflation has spiked at the “real” rate due to the costs of fuel and food, but inflation at the core level has been low. There have been some slightly better GDP numbers, but they remain low. Retail sales improved as the back‐to‐school period started, but consumer confidence is still low.

There is no clear path in sight…other than the Fed remains “prepared.”

-Chris Kuehl, PhD, NACM economist

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