As we sip our coffee and start our weekends or workdays there is a group of economists, Federal Reserve officials and finance ministers from the U.S. and around the world gathering in Jackson Hole, Wyoming for three days. Why is this worth mentioning?
There is a bit of history to consider:
Back in December 1996 at an economic forum similar to the Jackson Hole symposium, the then Chair of the US Federal Reserve, Alan Greenspan, uttered the now famous words about “irrational exuberance” in the US stock market. His comments were thought to be the basis for the “dot-com bust” three years later. These symposiums can move markets.
Fast forward to today. The US Federal Reserve officials are meeting as we speak in Jackson Hole, WY with Mexican Central Bank officials, Central Bank of Canada officials, the chief economist for Amazon.com… among other notable major US and world economists whose comments can affect the stock and bond markets. Following the US Federal Reserve Chair Jerome Powell’s “keynote” speech Friday, the US stock markets finished at record highs in the S&P 500, the Nasdaq Composite and the Russell 2000 (the US small-company index). These symposiums still move markets!
The Jackson Hole economists are discussing the amazingly low unemployment numbers in the US – but at the same time economists are cautious that low unemployment could mean higher inflation to come. But then they discuss how interest-rate policy attempts to equalize all the factors and prevent turmoil in the economy (the US Federal Reserve is currently in “tightening mode” meaning higher interest rates to come). The discussion “see-saws” among all these factors.
The Fed Chair said in his closely watched speech that he sees short-term interest rates in the 2-2.5% range in the near future, and then heading higher over coming months. He stated his desire to maintain inflation at about 2% (this does not reflect inflation of more volatile items like food and energy). At the most basic, the Chair Powell stated that the US economy is strong.
All of this discussion is noise in the bigger picture. Market predictions made by truly smart people (who will be fly-fishing and mountaineering by the end of this weekend) run the gamut from longer-term optimistic to short-term AND long-term pessimistic. What matters is that you have an asset allocation that reflects:
- Your desire to take risk
- AND a path forward to attempt to achieve your goals.
Yes, it has been positive to see rising stock markets and gains in our savings and investment accounts. But it is more about “What is your PLAN” for building and preserving your savings and investments – and managing your spending and borrowing. “Rocky Mountain High” is a pleasant place to be. But it does not happen without a PLAN and advice.