Risk Report
Postcard from Jackson Hole
GIC’s Teton Economic Outlook
July 8, 2026
The Global Interdependence Center is a Philadelphia-based nonprofit dedicated to fostering open, neutral dialogue and forums among a global network of leading economic thinkers to explore the forces shaping the global economy and their impact on living standards.
The Teton Economic Outlook is GIC’s annual gathering in Jackson Hole, Wyoming. Last week’s event convened economists, policy makers, fixed-income and equity investors, immigration attorneys, and technology experts for a full day of discussion on the forces most likely to shape markets and institutions over the next several years.
RiskBridge proudly sponsors the GIC and its mission. What follows is our summary of the day’s key themes and takeaways, prepared for clients and friends of the firm.
The Fed: A Hall of Mirrors
The Fed is watching markets. Markets are watching the Fed. Neither has a clear view. The new Warsh-led Fed has made two moves. It ended forward guidance. It also stopped explaining how incoming data translates into decisions (the reaction function). The first is defensible. The second is not.
Lael Brainard, former Vice Chair of the Federal Open Market Committee and Fellow of the GIC’s College of Central Bankers, drew the distinction cleanly: reaction-function transparency tells
markets how the Fed is thinking, not what it will do. Removing it does not give the Fed more freedom, but risks creating more noise, according to Brainard. Two-year Treasury yields swung
sharply in both directions within two weeks of the June FOMC meeting, with no meaningful new data driving either move.
The balance sheet has grown by $300 billion over the past six months, while M2 is rising (a liquidity tailwind). The Fed’s new rhetoric is hawkish (a liquidity headwind). These are opposing
signals.
Tariffs: Price Increase Pass Through
The United States is a country formed in the wake of a trade war 250 years ago. Today, effective
U.S. tariff rates are roughly 10% pre-substitution and 7% post-substitution, which is a post-WW2
high, even after USMCA exemptions that now exceed 90% utilization. Tariff rates have changed
more than 30 times over the past year. That is not policy. That is a Ouija board.
China redirected exports to developing countries, often backed by Chinese credit, and moved
products through Vietnam and other lower-tariff transshipment points. The decoupling is real. It
has not been painless for anyone.
The pass-through is documented. Chinese goods subject to 30–40% tariffs led to an 8% increase
in U.S. consumer prices. In broader import and PPI measures, pass-through exceeded 100%.
Middle-income households cut quantities purchased by 3 to 4% for every 1.2% tariff-driven price
increase. Spending cutbacks began before prices moved, a precautionary response, not just a
sticker-price reaction.
Iran and Energy: Partial Recovery, Persistent Risk
The Strait of Hormuz disruption touched crude, refined products, LNG, and fertilizers
simultaneously. Oil prices reached approximately $120 at peak tension before easing on a
ceasefire memorandum; Brent crossed below $80 again during the session. Crude shipping has
partially recovered. Refined-product flows have not been constrained by refinery damage and
reliance on crude from existing storage.
The macro consequences extend beyond the price move. Defense and insurance spending will
rise. The logic of just-in-time supply chains is giving way to just-in-case inventory building. That
transition raises costs and potentially reduces profit margins.
Immigration: Closing the Door on Growth?
The United States is a country formed by immigration. 77% of U.S. adults say America’s openness
to people from around the world is essential to who we are as a nation (Pew). About half of Fortune
100 companies were founded by immigrants or their children, and roughly the same percentage
of U.S. AI companies were founded by people who arrived on student visas.
Yet 2025 was the first year of net negative U.S. migration since 1936. Foreign tourism and foreign
student enrollment are down roughly 20% y/y. Last October, a raid at a Hyundai battery plant in
Georgia, an $8.6 billion reshoring investment, deported approximately 300 Korean workers,
directly colliding with the administration’s own industrial policy goals.
The last comprehensive legislative reform for U.S. immigration was in 1986. Since the failed 2013
attempt, both parties have governed by executive action, memo, and shifting enforcement
priorities rather than statute, pressuring each administration to signal control through tighter rules
on entry and status. In a separate Pew survey, roughly half of U.S. adults (48%) say the current
deportation policy is “about the right amount” or “too little”.
The US Census Bureau forecasted in 2023 that the US population would grow from 349 million
to 366 million by 2100. Under the current restrictive policy, the U.S. population is projected to
decline to 226 million by 2100 (BoA). The demographic math is uncomfortable:
- The numbers game. To sustain economic growth, some combination of new workers and
technological advancement is needed to offset the impact of aging Baby Boomers leaving
the workforce. - Population growth. Maintaining today’s worker-to-pensioner ratio would require
immigration to grow faster than any host country would find comfortable. - Asymmetrical impacts. Smaller cities, rural areas, and smaller companies are struggling
to attract and retain enough workers. Small business hiring intent rose in June, but 84%
of those seeking to hire found few or no qualified applicants (NFIB).
Whether AI, wage growth, or renewed immigration fills that gap is still an open question.
AI: Investment Confirmed, Returns Pending
According to the U.S. Census Bureau, data center construction has surpassed office building
construction. Approximately $3 trillion in digital infrastructure investment is expected over the next
three to five years, largely debt-financed. The consensus was that the capital commitment is
available. For now.
The productivity returns are narrower than the investment implies. Measurable AI-driven gains
(output rising while employment holds flat) are evident across three sectors: technology, finance,
and business services. Together, they cover roughly 20% of the labor force. The remaining 80%
of industries have shown limited impact so far.
Small businesses are testing low-cost AI tools at the margins. The more consequential shift is
happening in new business formation, AI-native firms entering at inception, embedding the
technology from day one rather than retrofitting it. Cultural resistance is real: AI references drew
boos at commencement speeches; data center projects face local opposition. These frictions do
not invalidate the productivity thesis. They affect the pace.
Jackson, Wyoming: Global Wealth, Local Consequences
A Jackson Town Council member opened with a simple question: how is global interdependence
reshaping a small, geographically isolated community? In Teton County’s case, it is making it
unrecognizable.
The county has the nation’s highest per-capita income, approximately $530,000 in 2024, six to
eight times the national average, driven almost entirely by passive and investment income that
accelerated after the 2018 tax cuts. The population has been flat for a decade. The wealth arrived.
The people did not multiply with it. Mean income is now roughly six times the median; it was two
times at the start of the century.
The median home has tripled since 2018. A wage earner cannot buy one. Wyoming levies no
income tax; sales tax provides 80% of Jackson’s revenue. Investment income and asset
appreciation, the forces driving local wealth to historic extremes, fall largely outside that tax base.
The community cannot fund the services its wealth creates demand for.
The Councilman closed by asking the room for ideas. Local government cannot solve what
national and global forces have built. Jackson Hole is an extreme version of what the rest of the
country is navigating, and possibly a preview of where it lands.
Capital Markets: Sleeping With One Eye Open
Guggenheim Partners and Aristotle Pacific Capital, both firms built on managing credit risk,
corporate bonds, leveraged loans, and related instruments for institutional and individual
investors, assessed markets against the backdrop of the day. Their read: the system is wellfunded, credit is sound, and the structural risks that matter are not imminent.
Both firms see the 10-year Treasury settling near 4.40–4.75%, consistent with a 200-plus-year
average of 4.5% and a reflationary environment closer to the 1990s than to the post-GFC era.
Inflation is more likely to run near 3% than return to 2%. They agreed that a move to 5% in the
10-year Treasury yield would likely prove unsustainable and represent a potential buying
opportunity to pick up a higher yield.
The futures market is currently pricing in one to two Fed rate hikes. Both speakers were skeptical
that the Fed would hike this year. Guggenheim flagged the internal contradiction: a balance sheet
growing $300 billion in six months alongside hawkish rate rhetoric, arguing that investors should
give greater focus to the Fed’s balance-sheet tools rather than defaulting to hikes in response to
supply-driven inflation.
There were two structural risks flagged. In private credit, leverage is creeping higher at the lower-quality end of the loan market. In addition, redemption terms for business development companies
(BDCs) and semi-liquid (evergreen) vehicles do not align with the liquidity of their underlying
assets. A trigger event could lead to market stress as excess leverage meets insufficient liquidity.
In equities, the introduction of single-stock leveraged ETFs was named as a late-cycle
development worth watching.
What keeps these fund managers up at night? Missing the right signal amid the noise, and
fragmented state-by-state AI regulation, a governance patchwork that could impede the efficient
deployment of capital into the technology that most needs consistent rules to scale.
The Bottom Line
Four uncertainties dominated the day: monetary policy, trade, demographics, and technology.
They sit against a backdrop of abundant liquidity, resilient credit, and tight spreads. The
uncertainty is real. So is the strength and resilience of the capital markets
.
The U.S. private sector retains its capital-allocation advantages. Whether government institutions
can manage the distributional consequences of AI, tariffs, a shrinking population, and rising debt
and deficits is the question that remains least resolved. It is also the one most likely to determine
what the next decade looks like for investors.
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