And while the soft landing we’ve been forecasting for well over a year has been achieved (finally becoming the predominant view among economists now that it’s actually occurred), it’s still worth piling on about how phenomenal the U.S. economy is these days.
Inflation is under control (3.7%) with core inflation (2.4%) effectively at the Fed’s target level, GDP growth in Q3 (4.9%) was extraordinary, consumers are continuing to spend (up 0.7% in September), and the job market, with unemployment at near-record lows (3.8%), keeps chugging along at a solid clip.
So despite the fact that a lot of economists still talk about the soft landing as some probabilistic event that may or may not happen in the future (with a majority having now come around to seeing it - after the fact - as increasingly likely to occur and a minority that see nothing but storm clouds on the horizon), the indisputable fact is that it has already occurred. Inflation is well under control and unemployment has barely budged since the Fed began hiking rates.
The soft landing has happened.
Of course, just as we spent excessive energy debating how long a generally accepted duration was for the word ‘transitory’ (as in inflation), many will most assuredly exhaust themselves debating how long the wheels must touch down for a landing to qualify as soft. Given the fact that we called the soft landing in FEB ‘23, it shouldn’t be surprising that we’d view that debate as irrelevant - in our mind the plane’s been on the tarmac for more than enough time.
We’ll return in future posts to those increasingly ominous storm clouds, the not-surprising resilience of the job market, and what both mean to the economy going forward, but for now we’ll leave things with one last chart (WSJ) that most succinctly captures not only the U.S. economy in the covid era, but also the criticality of the labor market and the inherent value of accurate, reliable, and forward-looking job market data.