Some economists are warning it is not so simple, however. “We have greater resiliency within the economy than I would have anticipated at this point in time, given the extent of rate increases we’ve gotten,” said Matthew Luzzetti, Deutsche Bank’s chief U.S. Though a "soft landing" is not yet guaranteed, compared with earlier projections banks seem to feel it is more in reach. That's probably because of healthy job numbers and consistently falling inflation along with steady consumer spending. Investors seem less jumpy about a recession, however. This week, Chair Jerome Powell will gather the Fed to decide on interest rate hikes, and all eyes are trained on the officials as they near the coveted "soft landing." The Fed is predicted to announce another rate hike, the 11th consecutive one since March of 2022.īill Adams, chief economist for Comerica Bank, told USA TODAY he expects an increase of a quarter of a percentage point, bringing the federal funds to a target range of 5.25% to 5.5%. Essentially, if the Fed is in the cockpit, a soft landing wouldn't jolt the American economy when the plane hits the tarmac. The hope is to usher in a "soft landing," or a slowing of the economy without significant increases in unemployment or economic contraction. That would require a "significant decline in economic activity that is spread across the economy and lasts more than a few months," according to the National Bureau of Economic Research, the nonprofit that calls recessions.įor more than a year, the Fed has raised rates aggressively to wrestle down inflation but has slowed the pace recently as its key rate hit a 16-year high, partly in hopes of avoiding an outright downturn in the economy. economy has not yet fallen into a recession. Could a "soft landing" be in sight? Here's what we know.įed rate hike live updates: Interest rates expected to rise again to further cool inflation What is a recession 'soft landing'?ĭespite plenty of forecasting, the U.S. Those fears appeared slightly assuaged this month as inflation numbers continued to drop and the economy showed remarkable resiliency. To get prices under control and keep the economy from spinning out, the Federal Reserve stepped in with a series of rate increases meant to pump the brakes.īut as hike after hike arrived, some economists began to worry the market would not slow gracefully and instead grind to a screeching halt and plummet into recession. Soaring inflation translated to sticker shock for many Americans from the gas pump to the grocery store. Economic optimism has been in short supply over the past year.
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