Hopeful signs of an economic “soft landing” are emerging in Jackson Hole as the Fed meets global observers

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

Although Barazit welcomed the sales, the influx was not sustainable. Jackson Hole, Wyoming, was flooding with visitors as Americans crowded nearby Yellowstone and Grand Teton National Parks — outdoor locations that are perceived as safe vacation spots. Wealthy people who own property in the area also arrived to beat the pandemic.

“Covid was so unmanageable,” Barazit said of the summers of 2020 and 2021. “I’ve never seen it like this before.” Frustrated customers” would say, “I just wanted a burrito.”

This year, business is still good – but not as strong as before. Barazit’s costs for beef and chicken have fallen after rising over the past two years. It is not difficult to find workers. When a vacancy is advertised, people actually apply for it.

“We’ve got our reprieve,” said Barazit, 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 meeting Annual Economic Conference In Jackson Hole on Friday and Saturday, policymakers are trying to steer the US economy toward something akin to what is happening in Jackson Hole. They have raised them up The main interest rate to the highest level in 22 years To try to slow growth and bring inflation down to their 2% target. Consumer inflation, which peaked last year at 9.1% now 3.2%.

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

In Jackson, the economy is starting to show signs of stabilizing. Supply chains have returned to normal for some retailers, easing price pressures. Hotel occupancy rates have fallen from the boiling point of the pandemic years; Room rates have eased in response. Real estate agents advertise some discounted prices for housing, though they are still astronomical by national standards.

Jackson is certainly not a community leader. It is located in Grand Teton County The wealthiest and most uneven province in the country. Medium-sized homes sell by the millions. The area is home to a branch of First Republic Bank, which caters mostly to wealthy clients and was one of the three big banks that collapsed last spring. When Target recently opened a new store, it competed for workers by paying $25 an hour.

However, the area also attracts visitors of relatively modest means, who arrive in motorhomes to hike, fish and enjoy the area’s stunning natural beauty. Its permanent resident population has jumped in recent decades, providing a bit of economic stability. Among them are many immigrants who work in restaurants, hotels and resorts.

The Fed conference will be held against the backdrop of growing optimism about the US economy. At the national level, unemployment near the lowest level in half a century. And despite a sharp rise in borrowing costs as a result of the Fed’s interest rate hike, consumers did And they continued to increase their spending.

Meanwhile, there are encouraging signs that the economy may not be growing as fast as the Fed’s inflation warriors worry. Mortgage rates have risen above 7%, to their highest levels in two decades. Pull home sales down in processing. some retailers, Including Messi And Dick’s Sporting Goodsthey had to resort to deep discounts to get rid of excess inventory because many customers became more cost conscious.

Federal Reserve Bank of Atlanta President Rafael Bostick says he remains optimistic the central bank can move the needle and deliver a soft landing.

“The recession was not at all what I expected,” Bostic said in an interview on Wednesday. Meanwhile, 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 becoming more sensitive about how they spend their money.”

Travel has been a boost to the economy since last year. But there are signs at the national level that the situation is cooling. STR, a travel analytics company, has lowered its forecast for hotel occupancy rates, predicting that they will barely rise this year from 2022.

Some domestic flights have been depleted by a wave of overseas tourism. But Amanda Height, president of STR, said even some luxury travelers have cut back on leisure spending. The lower-priced hotels also saw fewer customers than in previous years.

“The planes are full, the hotels and restaurants are crowded,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. But we care about economic growth, not the level of activity. Growth appears to be slowing in air traffic and visits to restaurants as well as hotels.

And in Jackson, data compiled by the local Chamber of Commerce shows hotel occupancy slowing: it fell to 75% last June, from 81% in a pre-pandemic year in 2019.

The downturn in business has prompted many hoteliers in the region to cut prices, reflecting national trends that have helped reduce inflation. Nationwide, hotel rates fell on a monthly basis in June and July.

Keith Sproul, who owns the Brentwood Inn in Jackson Hole, said he has cut the cost of some of his suites by as much as a third to ensure they are booked.

“We all fill our room nights with discounts,” he said.

Co-owner Taylor Hall said sales remain good at Skinny Skis, an outdoor retailer in downtown Jackson. He admitted that its clients are not sensitive to inflation, given their high incomes.

But production of shoemakers in Vietnam and China appears to have fully recovered from COVID-19. This has helped reduce costs, which Hall said his store passes on to customers in the form of lower prices.

Meanwhile, the Russian invasion of Ukraine made the shop’s cross-country and alpine skis more expensive, because many of them were made in Ukraine. Production moved to other countries in Eastern Europe, while some Ukrainian factories resumed production after closing last year. But the unrest still leads to price inflation.

The interest rate hike by the Federal Reserve has led some business leaders in the region to delay projects. Because of rising mortgage rates, Mike Halpin, a land developer in Jackson, 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 location would attract workers in Jackson. Some employers may provide transportation from there. Workers in Idaho Falls and Rexburg, Idaho, where the population is also growing, can also become buyers.

But with mortgage rates soaring last fall, Halpin hesitated. He put project planning on hold in December.

Halpin believes the project can still succeed given current borrowing costs. He’s just concerned that rates could go even higher. He is waiting for some clear signs that the Fed is done raising interest rates.

And if Fed Chairman Jerome Powell finally makes it clear that interest rate increases are over?

“It will prompt me to begin the six-month planning process,” Halpin said. “I need to get on the ball this fall.”