How Jackson Hole became such an important economic talking shop
ON AUGUST 21st many of the world’s most powerful financial players will gather for three days in Jackson Hole, a mountain resort in Wyoming. The annual conference, which has been going on since 1978, is a chance for central bankers, finance ministers and academics to talk about the world economy in a public but informal setting. The tone is low-key: Jackson Lake Lodge, the relatively spartan setting for the talks, remains open to the public throughout the event. And there is little chance of an 18-course dinner like the one consumed by G8 leaders a few years ago at a summit in Japan on ending starvation. The event is formally the Federal Reserve Bank of Kansas City’s “Economic Symposium”. All 12 of the Fed’s district banks organise research conferences. So how did Jackson Hole become Davos for central bankers?
Originally, Kansas City’s conference was much like the rest. The first one, on “World Agricultural Trade: The Potential for Growth”, took place in Kansas City, Missouri, where the bank is based. In 1982 the conference moved to Jackson Hole (which is in the Kansas City district) and persuaded Paul Volcker, then chairman of the Fed and an avid fly-fisherman, to attend. In a textbook case of network effects, Volcker’s regular attendance attracted other policymakers and made the event an unequalled gathering for big economic hitters. (You can read an official history here.) Most conferences are hungry for attendance; Jackson Hole is by invitation only, and in recent years those invitations have become scarcer. Vincent Reinhart, a former Fed staffer who is now with Morgan Stanley, reckons that market participants such as Wall Street economists have gone from 27% of attendees in 1982 to just 3% in 2013. Their spots have been taken by foreign central bankers, who went from 3% of attendees to 31%, and reporters, who have grown from 6% to 12%. To maintain the relaxed atmosphere, reporters must observe what are now known as "Jackson Hole rules": the proceedings are all on the record but all other remarks during the conference, such as mealtime conversations, are off the record.
The papers and panels at each conference are organised around a theme; this year’s is “Re-Evaluating Labour Market Dynamics”. For many attendees, though, the highlights are the informal conversations that take place at meal tables and on hiking trails between events. Economic history has been made in Jackson Hole; Fed officials have occasionally met secretly at the conference to organise their response to global financial turmoil. And two previous Fed chairmen, Ben Bernanke and Alan Greenspan, used Jackson Hole to signal major shifts in policy.
Some murmured last year that the event was losing its cachet when Mr Bernanke, then in the last year of his term, and Mario Draghi, the president of the European Central Bank, declined to attend. Those whisperings are now largely absent: on Friday Janet Yellen, the Fed's current chair, will deliver the customary opening speech, Mr Draghi will speak at lunch, and traders around the world, watching from the outside, will hang on every word.
ON AUGUST 21st many of the world’s most powerful financial players will gather for three days in Jackson Hole, a mountain resort in Wyoming. The annual conference, which has been going on since 1978, is a chance for central bankers, finance ministers and academics to talk about the world economy in a public but informal setting. The tone is low-key: Jackson Lake Lodge, the relatively spartan setting for the talks, remains open to the public throughout the event. And there is little chance of an 18-course dinner like the one consumed by G8 leaders a few years ago at a summit in Japan on ending starvation. The event is formally the Federal Reserve Bank of Kansas City’s “Economic Symposium”. All 12 of the Fed’s district banks organise research conferences. So how did Jackson Hole become Davos for central bankers?
Originally, Kansas City’s conference was much like the rest. The first one, on “World Agricultural Trade: The Potential for Growth”, took place in Kansas City, Missouri, where the bank is based. In 1982 the conference moved to Jackson Hole (which is in the Kansas City district) and persuaded Paul Volcker, then chairman of the Fed and an avid fly-fisherman, to attend. In a textbook case of network effects, Volcker’s regular attendance attracted other policymakers and made the event an unequalled gathering for big economic hitters. (You can read an official history here.) Most conferences are hungry for attendance; Jackson Hole is by invitation only, and in recent years those invitations have become scarcer. Vincent Reinhart, a former Fed staffer who is now with Morgan Stanley, reckons that market participants such as Wall Street economists have gone from 27% of attendees in 1982 to just 3% in 2013. Their spots have been taken by foreign central bankers, who went from 3% of attendees to 31%, and reporters, who have grown from 6% to 12%. To maintain the relaxed atmosphere, reporters must observe what are now known as "Jackson Hole rules": the proceedings are all on the record but all other remarks during the conference, such as mealtime conversations, are off the record.
The papers and panels at each conference are organised around a theme; this year’s is “Re-Evaluating Labour Market Dynamics”. For many attendees, though, the highlights are the informal conversations that take place at meal tables and on hiking trails between events. Economic history has been made in Jackson Hole; Fed officials have occasionally met secretly at the conference to organise their response to global financial turmoil. And two previous Fed chairmen, Ben Bernanke and Alan Greenspan, used Jackson Hole to signal major shifts in policy.
Some murmured last year that the event was losing its cachet when Mr Bernanke, then in the last year of his term, and Mario Draghi, the president of the European Central Bank, declined to attend. Those whisperings are now largely absent: on Friday Janet Yellen, the Fed's current chair, will deliver the customary opening speech, Mr Draghi will speak at lunch, and traders around the world, watching from the outside, will hang on every word.
