Fed Speak: U.S. Economy May Have Achieved Soft Landing, But No One Is Eager to Declare Victory

BlockBeats News, February 15th, in his article in the "Fed Watcher" column, Nick Timiraos mentioned that various key indicators of the U.S. economy are pointing in the same positive direction: inflation is decreasing, the labor market remains strong, and economic growth is steady. This is not a final conclusion, but it is the closest the U.S. economy has ever come to achieving a soft landing (that is, restraining inflation while avoiding an economic downturn). Just four years ago, many economists thought this was impossible. Today, the scenario where the U.S. economy allows inflation to fall back to the Fed's 2% target without falling into a recession has become believable once again.

However, even though the economy doesn't need an oxygen mask, it is still too early to unfasten the seatbelt. The Fed's favored inflation indicator, core PCE year-on-year, is currently close to 3%. Many forecasters expect that as the price increases associated with tariffs spread to more areas, inflation will have little progress this year. At the same time, the labor market may not be as robust as last week's report indicated. Jeffrey Cleveland, Chief Economist at Payden&Rygel, objectively stated that the labor market has been weak, and this year, the unemployment rate is more likely to rise than fall.