The conference in Jackson Hole comes as the Fed nears an historic crossroads. The central bank has kept the target for its benchmark interest at zero since 2008, a legacy of the darkest days of the financial crisis and a reflection of the lumbering economic recovery since then. Over the past year and a half, amid faster economic growth and a rapid improvement in the job market, the Fed has taken small steps toward reducing its support.
But the big decision to raise its target interest rate still looms ahead, and Fed officials are seriously considering whether to finally abandon its crisis-era stance at its meeting next month.
“For inexplicable reasons, the Fed seems primed to intentionally slow down the economy in September,” said Ady Barkan, campaign director for Fed Up. “ The real crisis in America is stagnant wages and a lack of good jobs. We are going to Jackson Hole to remind the Fed of this stark reality: slowing the economy down now will leave African-American and Hispanic communities permanently mired in a Great Recession.”
The Fed Up campaign made history last year when about a dozen demonstrators showed up at the conference to draw attention to the country’s uneven economic progress, particularly among minority communities. The protest led to meetings with top Fed officials over the past year, starting off with Kansas City Fed President Esther George, one of the central bank’s most vocal supporters of tightening the reins on the economy, who met with the group for two hours in Jackson Hole. In the fall, Fed Chair Janet Yellen hosted the group, and organizers have reached out to other officials since then with mixed success.
The campaign is returning this year with a more concrete agenda and the backing of a growing number of established left-leaning academics and think tanks, including the Roosevelt Institute, the AFL-CIO and the Economic Policy Institute. The campaign is led by the Center for Popular Democracy.
The group is also slated to release a report touting the economic benefits of an economy at full employment, which it pegged at a jobless rate of 4 percent -- significantly lower than the Fed’s estimate of about 5 to 5.2 percent. The lower rate would amount to 14.3 million more jobs, boost the economy by $1.3 trillion and generate an additional $261 billion in tax revenue, according to the analysis by PolicyLink and the Program for Environmental and Regional Equity at the University of Southern California.
True full employment, the report argues, would translate into a much lower jobless rate among minorities. The study estimated the impact of a 4 percent unemployment rate for every gender and racial group, adjusted for disparities in age. Black households, for example, would see their income jump by 23 percent, from $37,025 to $45,568. While Fed policy is not going to be the only solution to getting to full employment for all, we see it as a critical component of a broad policy agenda,” said Sarah Treuhaft, a director at PolicyLink. “We know that we need more growth and we need more jobs to stimulate hiring of people who have been left behind.”
Treuhaft said that the report does not estimate what inflation would be under this scenario but pointed out that it remained relatively stable in 2000, the last time the labor market hovered around full employment. But many analysts believe that a 4 percent jobless rate would cause the economy to overheat and inflation to spike. And some economists -- including a vocal minority within the Fed -- believe the central bank is already in the danger zone.
Those groups are also taking their message to Jackson Hole in hopes of bending the ear of policymakers ahead of their crucial decision in September. The conservative American Principles Project is staging a conference in the shadows of the Grand Tetons that coincides with the Fed’s gathering. The group has been skeptical of the benefits of the Fed’s easy-money stance and the reach of its powers, Several members have called on the central bank to rely on prescribed rules for conducting monetary policy, a recommendation the Fed has opposed.
Steve Lonegan, director of monetary policy at APP, said the group hopes its conference will reinvigorate the public conversation about monetary policy, which he argues deserves as much attention among conservatives as cutting taxes and reducing regulations.
“This is a recent phenomenon that Americans are disconnected from the value of their money. It’s the third leg of an economic growth plan for America,” Lonegan said. “It’s their savings. It’s their wages. It’s their life’s work.”
The Jackson Hole conferences will take place Aug. 27 to 29. The theme of the official Fed meeting this year is inflation. The central bank has set a 2 percent target for price-level increases, but it has consistently undershot that goal in recent years and wage growth has been stagnant
The Fed Up campaign has called on the Fed to set a target for wage growth as well. It is also calling for reforms of the selection process for presidents and boards of directors at the Fed’s 12 regional banks.