How Fed chief Jerome Powell’s speech wiped off $78bn from wealthy Americans

Elon Musk’s wealth declined by $5.5bn and Jeff Bezos lost $6.8bn in the stock market rout following the speech in Jackson Hole

Federal Reserve chairman Jerome Powell's remarks are to be livestreamed from the annual Jackson Hole Economic Policy Symposium. Reuters

Philadelphia Federal Reserve Bank President Patrick Harker, left, speaks with CNBC's Steve Liesman in an interview ahead of the annual Federal Reserve Bank of Kansas City's Economic Policy Symposium, at Jackson Hole, Wyoming. Reuters

Ash Hermanowski, food access and operations manager of the Jackson Cupboard in Jackson Hole, hands out meals from a garage after the nonprofit's location flooded. AP

High inflation, soaring home prices and financial inequality are all too visible in the idyllic mountain setting where the economic conference takes place. AP

Esther George, president and chief executive officer of the Federal Reserve Bank of Kansas City, gives an interview at the Jackson Hole Economic Symposium Bloomberg

Pierre-Olivier Gourinchas, professor of economics at the University of California-Berkeley, at the 2019 summit. Reuters

Janet Yellen, at the time chairwoman of board of governors of the Federal Reserve System and Mario Draghi, at the time president of the European Central Bank, at Jackson Hole in 2017. Bloomberg

Mark Carney, left, at the time governor of the Bank of England, and Federal Reserve chairman Jerome Powell, at the 2019 Jackson Hole gathering. AP 

Former US Federal Reserve chairman Ben Bernanke, right, and Jean-Claude Trichet, former president of the European Central Bank, at a previous summit. AP

Former Federal Reserve vice chairman Richard Clarida at the 2019 Jackson Hole symposium. Reuters

With upscale ski resorts, campsites and ranches Jackson Hole is popular with outdoor enthusiasts. Bloomberg

In the span of eight minutes, Federal Reserve chairman Jerome Powell sparked a market rout that cut the fortunes of America’s richest people by $78 billion.

Tesla founder and chief executive Elon Musk saw $5.5bn erased from his wealth. Amazon founder Jeff Bezos lost $6.8bn, the most of anyone on the Bloomberg Billionaires Index.

The fortunes of Microsoft co-founder Bill Gates and legendary investor Warren Buffett declined by $2.2bn and $2.7bn, respectively, while Google co-founder Sergey Brin’s was knocked below $100bn.

Mr Powell used his speech at the Kansas City Fed’s annual policy forum in Jackson Hole, Wyoming, to reiterate that the US central bank will keep raising interest rates and probably leave them there for a while to reduce inflation.

He was seen as pushing back on a recent rally in US stocks that was fuelled by speculation that policy makers would soon reverse course from their tightening.

The S&P 500 tumbled 3.4 per cent, its worst day since mid-June.

The tech-heavy Nasdaq 100, which counts Microsoft, Amazon, Tesla and Alphabet among its biggest components, fell more than 4 per cent.

Few billionaire fortunes have been spared this year. The world’s 500 richest people lost $1.4 trillion in the first half of 2022, the steepest six-month drop yet for the wealthiest people on the planet.

But US stocks in July posted their strongest monthly advance since November 2020, leading investors to wager that the worst of the market rout was over.

Instead, Mr Powell’s speech served as a reminder that valuations of technology companies remain high by historical standards after an unprecedented run-up during the coronavirus pandemic, when interest rates were pinned near zero.