History indicates soft landings are scarce, perhaps nonexistent, and the challenges that the U.S. economy and Fed policymakers face in the coming months show why.
Those savings are running out, and most consumers will have to trim their sails or go into debt. But with credit conditions tightening, running up credit card balances, taking out second mortgages, and the like are unattractive.With services driving the recovery, steps such as eating at home more, attending fewer concerts, etc., are not terribly difficult. Despite the wailing, households can trim consumer spending without much difficulty.
The first half of this year, in an array of industrial activities that produce everyday items such as laundry detergent, the bottles for your water and other plastic packaging, fresh produce, meat and other groceries, costs were kept down and profit margins and stock prices were elevated by tame material costs and the post-COVID healing of supply chains.
The labor market may not be hot, but even as the economy slows, the ratio of job-seekers to job openings remains elevated at 1.5. That’s above the less than one needed to halt wage pressures in service activities and pull inflation down to 2%. In February of that year, then-Federal Reserve Chairman Alan Greenspan started raising interest rates and ultimately pulled down consumer price index inflation, minus the volatile food and energy sectors, from 2.9% to 2.1%. But that reduction is hardly on the scale of the task that current Fed Chairman Jerome Powell faces, with core inflation having peaked at 6.5% in March 2022 and still hovering near 4%.
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Source: MarketWatch - 🏆 3. / 97 Read more »