UNITED STATES NEWS

Hopeful signs of an economic ‘soft landing’ emerge in Jackson Hole as Fed meets with world watching

Aug 23, 2023, 8:44 PM

JACKSON HOLE, Wyoming (AP) — At the height of the post-pandemic economic recovery, Andy Parazette’s taco shop enjoyed such a crush of business that customers sometimes had to wait an hour for a burrito.

Though Parazette welcomed the sales, the influx was unsustainable. Jackson Hole, Wyoming, was absorbing a flood of visitors as Americans crowded into nearby Yellowstone and Grand Teton national parks — outdoor sites seen as safe vacation spots. The uber-wealthy who owned area properties arrived, too, to ride out the pandemic.

“The COVID thing was unmanageable,” Parazette said of the summers of 2020 and 2021. “I’d never seen it like that before.” Frustrated customers “were like, ‘I just wanted a burrito.’ ”

This year, business is still good — just not as robust as it had been. Parazette’s costs for beef and chicken have eased after spiking the past two years. It’s not quite as hard to find workers. When he advertises a job opening, people actually apply for it.

“We’ve had our reprieve,” said Parazette, 54, who has owned Pica’s Taqueria with his wife, Danielle, for 22 years. “It’s not necessarily a bad thing.”

As the Federal Reserve prepares to hold its annual economic conference in Jackson Hole on Friday and Saturday, its policymakers are trying to guide the U.S. economy toward something akin to what’s happening in Jackson Hole. They have jacked up their key interest rate to a 22-year high to try to slow growth and bring inflation down to their 2% target. Consumer inflation, which peaked last year at 9.1%, is now 3.2%.

Even as they cool the economy, the Fed’s policymakers hope to avoid tipping it into a recession — a notoriously difficult achievement that economists call a “soft landing.”

In Jackson, signs that the economy is stabilizing have begun to emerge. Supply chains have normalized for some retailers, reducing pricing pressures. Hotel occupancy rates have come off the boil of the pandemic years; room rates have eased in response. Real estate agents are advertising some reduced home prices, though by national standards they remain astronomical.

Jackson, to be sure, is not a bellwether community. It lies in Grand Teton County, the richest and most unequal county in the nation. Average-sized homes sell for millions. The area includes a branch of First Republic Bank, which caters to mostly wealthy clients and was one of three major banks that collapsed last spring. When Target opened a new store recently, it plunged into the competition for workers by dangling $25 an hour.

Yet the area also draws visitors of relatively modest means, who arrive in RVs to hike, fish and revel in the area’s stunning natural beauty. Its population of permanent residents has jumped in recent decades, providing a bit of economic stability. They include many immigrants who labor in restaurants, hotels and resorts.

The Fed’s conference will occur against a backdrop of growing optimism for the U.S. economy. Nationally, unemployment is near a half-century low. Despite sharply higher borrowing costs caused by the Fed’s rate hikes, consumers have continued to increase their spending.

At the same time, there are encouraging signs that the economy might not grow so fast as to alarm the Fed’s inflation fighters. Mortgage rates have spiked above 7%, to their highest levels in two decades, dragging down home sales in the process. Some retailers, including Macy’s and Dick’s Sporting Goods, have had to resort to deep discounts to clear out excess inventories because many customers are becoming more cost-conscious.

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, says he’s still optimistic that the central bank can thread the needle and achieve a soft landing.

“A recession has never been in my outlook,” Bostic said in an interview Wednesday. At the same time, he said, he has heard from some business leaders who are concerned about the jump in borrowing costs.

“Things are slowing down in an orderly fashion,” he said. “People are being more sensitive in how they are spending their money.”

Travel has been a boost to the economy since last year. But there are signs nationally that it is cooling. STR, a travel analytics firm, has lowered its forecast for hotel occupancy rates, projecting that those rates will barely increase this year from 2022.

Some domestic travel has been siphoned away by a burst in overseas tourism. But STR’s president, Amanda Hite, said even some luxury travelers have pulled back on leisure spending. Lower-priced hotels have also seen fewer customers compared with previous years.

“Planes are full, and hotels and restaurants are busy,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “But we care about economic growth, not the level of activity. And growth appears to be slowing,” in airline traffic and restaurant visits, as well as hotels.

In Jackson, data prepared for the local Chamber of Commerce shows a slowdown in hotel occupancy: It dropped to 75% this June, from 81% in the pre-pandemic year of 2019.

The decline in business has prompted many hotel owners in the area to cut prices, mirroring national trends that have helped reduce inflation. Nationally, hotel prices dropped on a monthly basis in June and July.

Keith Sproule, who owns the Brentwood Inn in Jackson Hole, said he’s marked down the cost of some of his suites by as much as one-third to ensure that they’re booked.

“We’re all filling our room nights through price reductions,” he said.

Sales remain healthy at Skinny Skis, an outdoor retailer in downtown Jackson, said co-owner Taylor Hall. Its customers are not inflation-sensitive, given their high incomes, he acknowledged.

But production at shoe makers in Vietnam and China appears to have fully rebounded from COVID. This has helped lower costs, which Hall said his shop is passing on to customers in the form of lower prices.

At the same time, Russia’s invasion of Ukraine has made the cross-country and Alpine skis the store sells more expensive, because many had been made in Ukraine. Production has moved to other Eastern European countries, while some Ukrainian factories have resumed output after shutting down last year. But the disruptions are still inflating prices.

The Fed’s rate hikes have led some business leaders in the region to postpone projects. Because of rising mortgage rates, Mike Halpin, a Jackson-based land developer, has delayed his plans to build about 400 homes on 100 acres in Ririe, Idaho, about an hour and a half away.

He thought the site would appeal to workers in Jackson. Some employers might even provide transportation from there. Workers in Idaho Falls and Rexburg, Idaho, where populations are also growing, could also become buyers.

But as mortgage rates marched higher last fall, Halpin got cold feet. He put the project’s planning on hold in December.

Halpin thinks the project could still succeed at current borrowing costs. He just worries that rates might go even higher. He is waiting for some clear sign that the Fed is done with its hikes.

And if Fed Chair Jerome Powell eventually does make it clear that rate increases are over?

“It would trigger me to start the six-month planning process,” Halpin said. “I need to get the ball rolling by this fall.”

United States News

FILE - Leslie Moonves attends the CBS Network 2015 Programming Upfront at The Tent at Lincoln Cente...

Associated Press

LA ethics panel rejects proposed fine for ex-CBS exec Les Moonves over police probe interference

LOS ANGELES (AP) — The Los Angeles City Ethics Commission unanimously rejected a proposed settlement between the city and Les Moonves on Wednesday, saying a tougher penalty is warranted for the former CBS chief executive accused of interfering with a police investigation into sexual assault allegations against him. Moonves had agreed to pay an $11,250 […]

2 hours ago

Associated Press

Trial of ‘Rust’ armorer to begin in fatal film rehearsal shooting by Alec Baldwin

SANTA FE, N.M. (AP) — Attorneys prepared to make opening statements Thursday at the first trial related to the fatal shooting of a cinematographer by actor Alec Baldwin during a rehearsal for the Western film “Rust.” Before Baldwin’s case progresses, the movie’s weapons supervisor is being tried on charges of involuntary manslaughter and tampering with […]

3 hours ago

FILE - Darryl George, a 17-year-old junior, before walking across the street to go into Barbers Hil...

Associated Press

Trial to determine if Texas school’s punishment of a Black student over his hair violates new law

ANAHUAC, Texas (AP) — A trial is set to be held Thursday to determine if a Black high school student in Texas can continue being punished by his district for refusing to change his hairstyle, which he and his family say is protected by a new state law that prohibits race-based hair discrimination. At issue […]

3 hours ago

In this undated image provided by Haylee Wendling, family members of Colin Conner pose for a photo ...

Associated Press

Amid fentanyl crisis, Oregon lawmakers propose more funding for opioid addiction medication in jails

PORTLAND, Ore. (AP) — Kendra Sawyer spoke with her dad from the Deschutes County jail and told him she loved him. Six hours later, in the throes of opioid withdrawal, the 22-year-old took her own life. A year later, Sawyer’s father, Kent, is left wondering whether his daughter, troubled as she was, might still be […]

3 hours ago

FILE - New York Attorney General Letitia James speaks Feb. 16, 2024, in New York. Donald Trump coul...

Associated Press

New York AG says she’ll seize Donald Trump’s property if he can’t pay $454 million civil fraud debt

NEW YORK (AP) — Donald Trump could be at risk of losing some of his prized properties if he can’t pay his staggering New York civil fraud penalty. With interest, he owes the state nearly $454 million — and the amount is going up $87,502 each day until he pays. New York Attorney General Letitia […]

3 hours ago

FILE - New York Attorney General Letitia James speaks Feb. 16, 2024, in New York. Donald Trump coul...

Sponsored Content by

NEW YORK (AP) — Donald Trump could be at risk of losing some of his prized properties if he can’t pay his staggering New York civil fraud penalty. With interest, he owes the state nearly $454 million — and the amount is going up $87,502 each day until he pays. New York Attorney General Letitia […]

Sponsored Articles

...

Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.

...

Day & Night Air Conditioning, Heating and Plumbing

Day & Night is looking for the oldest AC in the Valley

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

...

Sanderson Ford

The best ways to honor our heroes on Veterans Day and give back to the community

Veterans Day is fast approaching and there's no better way to support our veterans than to donate to the Military Assistance Mission.

Hopeful signs of an economic ‘soft landing’ emerge in Jackson Hole as Fed meets with world watching