Pica’s Mexican Taqueria, located in Jackson, Wyoming, experienced a surge in business during the post-pandemic economic recovery. The influx of customers, however, became unsustainable for the taco shop. Jackson Hole attracted a large number of visitors who were seeking outdoor vacation spots, particularly Yellowstone and Grand Teton national parks. Additionally, the area’s wealthy property owners sought refuge in the region during the pandemic.
Andy Parazette, co-owner of Pica’s Taqueria, described the overwhelming demand during the summers of 2020 and 2021 as “unmanageable.” Customers grew frustrated with long wait times and expressed their discontent, saying, “I just wanted a burrito.” Although business is still good this year, it has not reached the same robust levels as before. Parazette has noticed a decrease in the cost of ingredients like beef and chicken, which had spiked in the past two years. Furthermore, it has become slightly easier to find workers, as more people are applying for job openings.
As the Federal Reserve gears up for its annual economic conference in Jackson Hole, its policymakers aim to guide the U.S. economy toward a similar path to what is happening in the region. The Fed has raised interest rates to curb growth and bring inflation down to their 2% target. They strive to achieve a “soft landing,” avoiding a recession while cooling the economy.
In Jackson, signs of economic stabilization have started to emerge. Supply chains have normalized for some retailers, reducing pricing pressures. Hotel occupancy rates have come down from the pandemic years, leading to lower room rates. Real estate agents are even advertising reduced home prices, although they still remain high by national standards.
Jackson may not be a perfect representation of the overall economy as it is located in Grand Teton County, the richest and most unequal county in the United States. Average-sized homes sell for millions, and the area has experienced its fair share of economic challenges, including the collapse of major banks. However, the region attracts a diverse range of visitors, including those with more modest budgets who come to enjoy outdoor activities. The population of permanent residents has also increased over the years, providing some stability to the local economy.
Overall, there is growing optimism for the U.S. economy, with low unemployment rates and continued consumer spending. However, there are also indications that the economy might be slowing down. Higher mortgage rates have affected home sales, and retailers have had to offer deep discounts to clear excess inventories. Federal Reserve Bank of Atlanta President Raphael Bostic remains optimistic about achieving a soft landing but acknowledges concerns from business leaders about rising borrowing costs.
While travel has been a boost to the economy, there are national signs of cooling in the sector. Hotel occupancy rates are projected to have minimal growth this year, with some domestic travel diverted by increased overseas tourism. Even luxury travelers are being more cautious about leisure spending. Retailers, airlines, and restaurants have seen a slowdown in growth compared to previous years.
In Jackson, local data shows a decline in hotel occupancy rates, signaling a slowdown in the area’s tourism business. Hotel owners have responded by lowering prices, contributing to the national trend of reducing inflation. Despite these challenges, outdoor retailer Skinny Skis has maintained healthy sales, offering lower prices to customers due to reduced production costs.
The Federal Reserve’s rate hikes have led some business leaders in the region to postpone projects. Rising mortgage rates, in particular, have caused land developer Mike Halpin to delay his housing development plans. He remains hopeful that the project can still succeed at current borrowing costs but is cautious about potential future rate increases.
As the Fed’s conference takes place, there is an ongoing effort to strike a balance between managing inflation and avoiding a recession. The economic situation in Jackson Hole serves as an example but may not fully represent the overall state of the U.S. economy.
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