Cooling inflation and a hot jobs report prompt soft-landing talk, but the “vibecession” is hard to shake
Hot jobs eats… meet cool inflation treats. Last week's strong jobs report surprised analysts expecting higher unemployment #s. Instead, new claims fell to their lowest level since September. That's not all: last week's inflation report showed that prices grew more slowly in November than experts had predicted (think: 7.1% in a year vs. 7.3%). Now some Wall Street analysts hope the US economy can avoid a recession with a Goldilocks-like "soft landing" (picture: a controlled economic slowdown).
- Threading a needle… while doing cartwheels. Soft landings are difficult to pull off. They're rare too: the last one was in 1994.
- Times’ve changed… Economists say that unlike in the ’90s, we're now facing dual supply shocks with Covid and Russia's war on Ukraine.
The “vibecession” will be televised… With wage growth lagging behind inflation and countless headline-making layoffs — 114K tech workers have been axed since March alone — the economic vibe this year has been rough. But reality's been mixed. Gas is cheaper than a year ago, and 72% of those laid-off tech workers found jobs within three months. What's more, over half of those rehired workers got a pay bump. More bright news: just last week Fed Chair Powell said new growth-rate projections are not in recession territory.
Recession worries ≠ recession reality… CEOs have been forecasting economic doom and gloom for months. In June, JPMorgan's CEO warned of an economic "hurricane," and last week United Airlines' CEO said the company was preparing for a "mild recession." A recession could still happen. But it's also possible that the Fed's ongoing rate hikes could work as intended: slowing the economy down just enough for the fabled soft landing.