Central bankers spot signs of recovery

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By Greg Wood and Sandra Shmueli BBC News, Jackson Hole, Wyoming

The idyllic setting of Jackson Hole plays host to the world's central bankers

Jackson Hole must be a contender for the most spectacular setting in the United States. The "hole", or valley, lies nearly 7,000 feet up, between the wooded ridges and jagged peaks of the Grand Teton Range, still dotted with snow even in high summer.

The sagebrush and the forests abound with wildlife - elk, moose and bear. But for two days every year a different type of animal can be spotted here - central bankers from around the world, gathering for their annual symposium at the lodge overlooking Jackson Lake.

It's a time for relaxation - hiking, kayaking - but also for serious and often technical discussion of the world's economic problems.

Government money has helped pay for a new ticket hall at the local airport

Ben Bernanke kicked off this year's symposium with some upbeat comments. "Prospects for a return to growth in the near term appear good," he said.

The chairman of the Federal Reserve is not given to overstatement. So for him this is pretty heady stuff and helped to boost share prices around the world.

But it is very much in line with recent statements from the Fed and his remarks contained an important warning. The financial system is not yet fully repaired and it is still difficult for people and businesses to get credit.

The president of the European Central Bank, Jean-Claude Trichet, also sounded a note of caution. "I am a little bit uneasy when I see that because we have some green shoots here and there, we are already saying, 'well, after all, we are close to back to normal'," he said.

'No change at all'

Airport manager Ray Bishop is not sure a recovery is around the corner

That caution is reflected in the state of the local economy here in Jackson Hole. Tourism is the biggest industry and it tells a mixed story.

Passenger traffic at the local airport is down by between 10% and 15% on this time last year. The airport has received $29m (£17.6m) of government money to pay for a new ticket hall. But manager Ray Bishop does not detect any sign of recovery.

"We don't see any change to that at all. In fact, September's numbers on the pre-bookings look a little softer. We haven't seen any statistics that makes us think that we've hit the bottom yet."

At the Mangy Moose, a local restaurant popular with holiday makers, customers are spending less than they did last year, even though the overall number of tourists has risen, perhaps because fewer Americans are going abroad, preferring instead to take a so-called "staycation".

When the last gathering was held here at Jackson Lake Lodge, no-one anticipated the scale of the financial disaster which was about to strike

"People are watching their pennies," says David Yoder, co-owner of the Mangy Moose, "I know that I'm watching mine. Our sales volumes are down but our bottom lines (profits) are up."

The Mangy Moose has cut its costs by reducing staff, so it can make a bigger profit from lower sales. This reflects what is happening across US industry. It is a jobless recovery, good for business but not necessarily for individuals.

Consensus

This presents a dilemma for the central bankers meeting here. At some stage they are going to have to put in place an "exit strategy", withdrawing the vast amounts of extra money they've pumped into the credit markets.

Many animals can be seen around the lodge where the bankers are gathering

But unless the private sector starts spending and investing more, recovery will not be sustainable. That is not happening yet. So there's a consensus at this symposium. Economic stimulus from governments and central banks will have to continue for some time to support recovery.

When the last gathering was held here at Jackson Lake Lodge, no-one anticipated the scale of the financial disaster which was about to strike.

"Is it only twelve months ago?" asked Glenn Hubbard, dean of Columbia University Business School, who's contributing to the symposium. "It feels like twelve centuries!"

The central bankers here have all aged a lot in the last year. But, as they head out on their hiking trips among the mountains and the lakes, they are feeling a bit more confident that a global economic recovery really is on the way.