Federal Reserve Chairman Ben Bernanke By Alex Brandon, AP The nation's economic headquarters today shifts 2,000 miles inland to Jackson Hole, Wyo., where Federal Reserve Chairman Ben Bernanke may offer clues about what the Fed might do to reinvigorate the flagging recovery. Bernanke will mount the podium at the Federal Reserve Bank of Kansas City's annual conference facing daunting political and economic challenges. In recent weeks, a steady flow of downbeat data revealed an economy struggling to gain momentum. Housing sales are sinking like a rock, new jobless claims remain uncomfortably high and regional manufacturing surveys are softening. Even the economy's one bright spot — business spending on computers and equipment — disappointed earlier this week. Today, the government is expected to sharply lower its estimate of second-quarter growth to less than a 1.5% annual rate. "The hopes of a V-shaped recovery are essentially dashed," says Tim Duy, an economics professor at the University of Oregon. RECOVERY WATCH: Tracking the economy; index shows slowing growth WHERE ARE THE JOBS: Latest forecast for 384 metro areas and all 50 states The economic elite gathered in Jackson Hole will look for Bernanke to sketch a road map for setting monetary policy following a debt-fueled boom and bust. The Fed's standard tool for managing the economy is the federal funds rate. But with rates already effectively at zero, Bernanke has employed unconventional means to boost credit flows. The Fed chairman also confronts divisions within the central bank's policymaking committee on the need to take further action to revive the crippled economy. Bernanke and several colleagues fear that the slowing economy could topple into a dangerous episode of self-reinforcing price declines, or deflation. To guard against that, the Fed earlier this month opted to reinvest in new Treasury securities the proceeds of maturing mortgage-backed securities it holds. It also could adopt other untried strategies, such as setting ceilings on two-year Treasury notes or buying a wider range of assets, as Bernanke suggested in a 2002 speech. "They're certainly not out of ammunition. ... They're not down to a cap pistol," said economist Stuart Hoffman of PNC Bank. However, inflation hawks, such as Thomas Hoenig, president of the Kansas City Fed, worry that easy monetary policy risks inflating new bubbles. "We are risking a repeat of past errors," he said in an Aug. 13 speech. Following its Aug. 10 meeting, the Fed policymaking body indicated a willingness to "employ its policy tools as necessary to promote economic recovery," suggesting a willingness to take new measures in coming months if needed. Bernanke "will not allow us to go into deflation. Right now, they are flirting right at the edge," said Joseph Gagnon, former Fed senior economist. Guidelines: You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference. You share in the USA TODAY community, so please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Use the "Report Abuse" button to make a difference. Read more