Preparing for an AI tax crisis

The Federal Reserve’s annual Jackson Hole symposium kicks off later this week in Wyoming, and the main event—Fed Chair Kevin Warsh’s Friday keynote—is drawing unusual attention precisely because no one knows what he will say. Warsh has been a closed book on forecasting the Fed’s plans, and economists are hungry for any signal about how the central bank is thinking about a slowly declining inflation rate, overall economic growth, and whether it’s comfortable with the current level of interest rates. As one economist put it, “I’d like to hear that,” but what he’d like and what he expects are two different things. The hope is that Warsh will drop at least some crumbs—perhaps discussing the task forces he created earlier this year on inflation, labor markets, and data quality, or explaining why he has held interest rates steady so far. Claudia Sahm, chief economist at New Century Advisors, looked back at the first Jackson Hole speeches of previous Fed chairs—Ben Bernanke on economic history, Janet Yellen on the labor market, Jay Powell on risk management—and noted that those speeches revealed not just topics but each chair’s approach. “It’s like these are decisions the Fed has made as he has been chair. Just talk to us about it. Why are you doing that? What data are you looking at?” She said that might not be the speech we get, but “it’s the speech we deserve.”